Should You Buy, Sell or Hold AES Stock After a 9.2% Rise in a Month?

The AES Corporation AES shares have gained 9.2% in a month compared with the Zacks Utility-Electric Power industry’s growth of 2.8%. The company is taking advantage of the global transition to renewable energy by making strategic investments in clean energy solutions, such as energy storage and utility-scale renewables, which offer a long-term growth opportunity.
 

AES is also benefiting from the increased demand from data centers, a market that is expanding quickly due to AI and cloud computing. Other utilities like Ameren Corporation AEE and PPL Corporation PPL are also benefiting from the increased demand from data centers. Shares of Ameren and PPL have gained 4.4% and 2.1%, respectively, during the aforementioned period.

Given the current outperformance in price, should you consider adding AES to your portfolio right now? Let's examine the factors in detail and assess the investment prospects.

Factors Driving the Performance of AES Stock

AES is leveraging the global shift toward renewables by investing in energy storage and utility-scale clean energy, while using AI-driven innovation and global diversification to support long-term growth and more stable revenues.

By supplying power from its renewable energy projects, AES secures long-term contracts (Power Purchase Agreements or PPAs) and positions itself as a key partner in the tech industry’s expansion.

As of Sept. 30, 2025, the company had signed or been awarded 2.2 GW of capacity, including 1.6 GW tied to data center demand. During the same period, it completed construction on 2.9 GW of new projects and maintained a project backlog of 11.1 GW supported by signed PPAs.

AES Indiana plans to convert the remaining two coal units at Petersburg to natural gas. The company expects this project to be completed in 2026. It is adding new renewable and natural gas capacity to the grid, supporting its target of net-zero GHG emissions by 2050.

AES is expanding its presence in the growing liquefied natural gas (“LNG”) market through strategic projects and infrastructure investments. Its Andres unit operates the Dominican Republic’s only LNG import terminal, supplying industrial users and power plants via long-term contracts. The company is also advancing major projects in Vietnam — the Son My LNG terminal and the 2,250-MW Son My 2 gas plant — which are expected to strengthen its global LNG footprint over the long term.

AES Stock’s Earnings Estimate

The Zacks Consensus Estimate for AES’ 2026 earnings per share (EPS) indicates an increase of 10.14% year over year. AES’ long-term (three to five years) earnings growth rate is 11.17%.
 

The Zacks Consensus Estimate for Ameren’s 2026 EPS indicates an increase of 6.87% year over year. AEE’s long-term earnings growth rate is 8.52%. The Zacks Consensus Estimate for PPL’s 2026 EPS indicates an improvement of 7.54% year over year. PPL’s long-term earnings growth rate is 7.34%.

AES Stock’s Earnings Surprise History

The company beat on earnings in two of the trailing four quarters and missed in the other two, delivering an average surprise of 14.68%.

AES’ Dividend History

The consistently strong performance of the company has enabled it to reward its shareholders through annual dividend rate hikes. On Dec. 5, 2025, its board of directors declared a quarterly common stock dividend of 17.595 cents per share. The company’s current dividend yield of 4.37% is better than the Zacks S&P 500 composite’s 1.06%. Check AES’ dividend history here.

AES’ Debt Position & Liquidity

Currently, the company’s total debt to capital is 78.58%, higher than the industry’s average of 61.05%. 
 

The company’s current ratio is 0.72. A current ratio less than one indicates that the company's current liabilities are greater than its current assets, which means it may struggle to meet its short-term obligations.

AES Stock’s Valuation

The company is currently trading at 6.17X, a discount compared to its industry’s 15.92X on a forward 12-month P/E basis.

What Should an Investor Do?

AES is driving long-term growth by expanding renewables, energy storage, and AI-enabled solutions, securing large data center PPAs, and building a strong contracted project backlog while advancing its net-zero goals. At the same time, the company is strengthening its global energy mix through coal-to-gas conversions and strategic LNG infrastructure investments in the Dominican Republic and Vietnam.

However, the company’s higher debt ratio and lower current ratio are concerning at the moment. New investors may want to wait for a better entry point, while existing shareholders of this Zacks Rank #3 (Hold) stock can continue to benefit from regular dividends and rising earnings estimates. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

 

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This article originally published on Zacks Investment Research (zacks.com).

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