DCF Studio

    AES · NYQ · Utilities

    The AES Corporation

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD -28.91

    Market price

    USD 14.90

    Implied upside

    -294.0%

    10-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case · Price 2026-11-02 · Accounts to 2025-12-31

    AdjustedFree cashflow is negative in at least one forecast year, so terminal value carries most of the valuation.
    AdjustedCapital expenditure runs at 51.4% of revenue against depreciation of 9.9%. A perpetuity has to be a steady state, so the forecast tapers capex to maintenance at depreciation plus the reinvestment terminal growth requires (g/ROIC of NOPAT), and the terminal year carries on from there. The bridge is shown under Terminal Value.

    Value Per Share

    Perpetuity growth
    USD -28.91-294.0%
    Exit multiple
    USD -17.78-219.4%
    Market price
    USD 14.90

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    -4bn-1bn1bnFY26FY27FY28FY29FY30FY31FY32FY33FY34FY35
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30FY31FY32FY33FY34FY35CAGR
    RevenueUSD 13.2bnUSD 13.4bnUSD 13.7bnUSD 14.0bnUSD 14.2bnUSD 14.5bnUSD 14.9bnUSD 15.2bnUSD 15.6bnUSD 16.0bn+2.1%
    EBITUSD 2.3bnUSD 2.3bnUSD 2.4bnUSD 2.4bnUSD 2.5bnUSD 2.5bnUSD 2.6bnUSD 2.6bnUSD 2.7bnUSD 2.8bn+2.1%
    NOPATUSD 1.8bnUSD 1.8bnUSD 1.9bnUSD 1.9bnUSD 1.9bnUSD 2.0bnUSD 2.0bnUSD 2.1bnUSD 2.1bnUSD 2.2bn+2.1%
    Add depreciation & amortisationUSD 1.3bnUSD 1.3bnUSD 1.4bnUSD 1.4bnUSD 1.4bnUSD 1.4bnUSD 1.5bnUSD 1.5bnUSD 1.5bnUSD 1.6bn+2.1%
    Less capital expenditureUSD -6.8bnUSD -6.4bnUSD -5.9bnUSD -5.5bnUSD -5.0bnUSD -4.6bnUSD -4.1bnUSD -3.5bnUSD -3.0bnUSD -2.4bn-10.7%
    Capex, % of revenue51.4%47.4%43.4%39.4%35.4%31.4%27.3%23.3%19.3%15.3%-
    Less increase in working capitalUSD 25.1mUSD 6.1mUSD 6.5mUSD 6.9mUSD 7.4mUSD 7.9mUSD 8.4mUSD 8.9mUSD 9.5mUSD 10.1m+9.6%
    Free cashflow to firmUSD -3.7bnUSD -3.2bnUSD -2.7bnUSD -2.2bnUSD -1.7bnUSD -1.1bnUSD -555.4mUSD 42.9mUSD 669.9mUSD 1.3bn-
    Discount factor0.96970.91180.85730.80610.75800.71270.67010.63010.59250.5571-
    Present valueUSD -3.5bnUSD -2.9bnUSD -2.3bnUSD -1.8bnUSD -1.3bnUSD -803.7mUSD -372.2mUSD 27.1mUSD 396.9mUSD 740.0m-
    Present Value Of The ForecastUSD -11.8bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate4.89%US 10-year Treasury (^TNX), 2026-11-02
    Equity risk premium4.23%Damodaran, January 2026
    Beta0.946Reported 0.920, pulled toward 1.0 (Blume)
    Cost of equity8.90%Risk-free + beta x equity risk premium
    Cost of debt6.89%Risk-free + 200bp, the spread for a B- rating at 1.4x interest cover, capped at 200bp because one year's cover is too noisy to charge more. Book interest / average debt was lower, at 4.8%.
    Market capitalisationUSD 10.6bn26.2% of capital
    Total debtUSD 29.9bn73.8% of capital, book value as a proxy
    Tax rate21.0%Effective, capped at statutory
    WACC6.35%E/V x Re + D/V x Rd x (1 - t)

    Terminal Value

    Perpetuity growth is intrinsic. The exit multiple defaults to the company's current EV/EBITDA, so it answers a different question - what the shares are worth if today's rating holds and EBITDA grows as forecast.

    Perpetuity growth at 2.50%

    Value per shareUSD -28.91

    254% of EV

    Forecast FCFF, final year
    USD 1.3bn
    Capex at depreciation, working capital in reinvestment
    USD 2.2bn
    Less reinvestment at g/ROIC (39.4% of NOPAT)
    USD -855.6m
    Capitalised
    USD 1.3bn
    ROIC (WACC floor)
    6.4%
    Terminal value, undiscounted
    USD 35.1bn
    Terminal value, discounted
    USD 19.5bn
    Enterprise value
    USD 7.7bn
    Less net debt
    USD 28.3bn
    Equity value
    USD -20.6bn

    Exit at 11.4x EBITDA

    Value per shareUSD -17.78

    176% of EV

    Terminal value, undiscounted
    USD 49.3bn
    Terminal value, discounted
    USD 27.5bn
    Enterprise value
    USD 15.6bn
    Less net debt
    USD 28.3bn
    Equity value
    USD -12.7bn

    Sensitivity

    Value per share (USD) by discount rate and long-run growth.

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    4.35%-2.68-0.014.5112.9632.26
    5.35%-19.59-20.04-20.38-20.56-20.44
    6.35%-27.69-28.30-28.91-29.52-30.13
    7.35%-32.91-33.41-33.91-34.41-34.90
    8.35%-36.71-37.12-37.54-37.95-38.36

    Outlined: this model. Green text: above today's price of 14.90. Shading: distance from this model's own value.

    Priced In

    What each input would have to be to justify the current price, one at a time.

    InputActualModelImplied
    Revenue growth, a year-1.0%2.7%14.4%
    EBIT margin18.6%17.2%34.4%
    Discount rate-6.4%4.1%
    Download as Excel

    Live formulas, not pasted numbers - edit a driver and the workbook reprices.

    Yahoo Finance and RBA data. General information, not advice. Methodology.