10 Best Electric Utility Stocks To Invest In

5. The AES Corporation (NYSE:AES)  

Number of Hedge Fund Holders: 46

The AES Corporation (NYSE:AES), based in Texas, operates across 14 countries and has evolved from a consulting firm into a major player in electricity generation and distribution. The company owns and manages power plants and utilities that generate electricity from a diverse mix of sources, including coal, gas, hydro, wind, solar, and other renewable energy sources.

For the third quarter, The AES Corporation (NYSE:AES) delivered mixed results, beating earnings expectations while missing revenue targets. The company reported adjusted earnings per share of $0.71, exceeding the analyst consensus of $0.59. However, revenue totaled $3.29 billion, falling short of the forecasted $3.46 billion. The company attributed the revenue miss to lower margins in its Energy Infrastructure segment and severe drought conditions that affected its Renewables business in South America. Despite the shortfall, AES reaffirmed its full-year 2024 adjusted EPS guidance range of $1.87 to $1.97, in line with the $1.92 consensus, and expects to achieve results in the upper half of the range.

On September 19, Mizuho reiterated its positive view on AES, maintaining an Outperform rating and a price target of $24. This outlook follows AES’s announcement of the sale of a 30% stake in its Ohio utility. Valued at approximately 1.8 times the Enterprise Value/Rate Base, the deal is part of AES’s broader $3.5 billion asset sale program. With this transaction, The AES Corporation (NYSE:AES) has divested $2.7 billion of assets since 2023, and the proceeds will be used to reduce debt at the AES Ohio holding company, which currently carries around $800 million in debt, impacting the company’s cash flow. The sale is also expected to provide equity financing for upcoming growth projects at the Ohio utility.