AES Corp (AES) Financial Statements

Analyzing AES Corp through the GoodMoat Quality Indicators reveals a business with clear strengths and critical weaknesses. On the positive side, the company shows solid profitability with an ROE of 22.4%, which exceeds the framework's high-quality threshold of 15-20%, and an operating margin of 10.5%. However, the financial health is overshadowed by major red flags. Most critically, the Free Cash Flow (FCF) generation is deeply negative, with a -16.2% FCF yield, failing the framework's test for positive, growing FCF. This indicates the company is consuming, not generating, cash from operations after capital expenditures. Furthermore, the balance sheet is heavily leveraged with a Debt/Equity ratio of 7.5, far above the framework's guideline for low debt (Debt/EBITDA < 1.0x), introducing substantial financial risk. Revenue growth is modest at 4.7% YoY, which does not meet the double-digit, sustainable growth criteria. The Growth Assessment is therefore unfavourable, as the trajectory is slow and not driven by durable competitive advantages typical of the utilities sector. For a value investor, the high leverage and negative cash flow are significant impediments to quality, despite the attractive dividend yield and current profitability. Analysis based on data as of 2024-05-15.