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AES Corp. – Hydroelectric Power Generation
The AES Corporation is a Fortune 500 company that generates and distributes electrical power. AES is headquartered in Arlington, Virginia, and is one of the world's leading power companies, generating and distributing electric power in 15 countries and employing 10,500 people worldwide. The company was founded on January 28, 1981, as Applied Energy Services by Roger Sant and Dennis Bakke, two appointees of the Federal Energy Administration under president Richard Nixon. The company was initially a consulting firm; it became AES Corporation, which went public in 1991. Sant was chairman, CEO, and president and Bakke was executive vice president until assuming the position of president in 1987. Bakke would later become the company's CEO in 1994, serving for 8 years until his resignation in 2002, in the midst of a liquidity crisis that followed the collapse of the energy giant Enron. Sant remained as executive chairman until 2003 and as a member of the board until 2006. Paul Hanrahan was appointed President and CEO and served for 10 years, overseeing the stabilization of the company. Until the early 2000’s the company followed self management delegating much responsibility to ordinary employees. In 2012, Hanrahan resigned, his position as President and CEO of the company succeeded by Andres Gluski. As CEO, Gluski has implemented a strategy of reducing the number of countries in which AES does business, from 28 to 16, for the purpose of consolidating operations and reducing costs. Additionally, he also began a program of reducing the company's total carbon emission intensity.
Analysis Results
Intrinsic Value $2.32
Latest Price $22.60
Relative Value 873% overvalued
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Cash Flow (Billions)
Analysis Parameters
New Ticker
Analysis Details
Growth Rate Projection

An exponential growth model was fit to the past cash flow data, giving more weight to more recent years. This model determined a growth rate estimate of -22.0%.

Weighted Average Cost of Capital (WACC)

The calculated WACC is 5.8%. This value is used as the default discount rate.

Value of Future Flows

Assuming a growth rate of -22.0%, the cash flows for the next 5 years are projected.

The present value of each year's flow is adjusted to present value using the discount rate.

Year Future flow (billion) Present value (billion)
2022 0.158 0.149
2023 0.123 0.11
2024 0.0959 0.0809
2025 0.0747 0.0596
2026 0.0582 0.0439
Terminal Value

Assuming a growth rate after the projection years of 2.0%, the terminal value of the company would be 1.56 billion. This corresponds to a present value of 1.11 billion.

Intrinsic Value Per Share

The total present value of the projected cash flows is 0.443 billion. Adding in the terminal value gives a total present value of 1.55 billion.

There are presently 668.0 million outstanding shares, so the intrinsic value per share is 2.32.

Financial Statements

The following data was to determine the past cash flows.

Current Assets 5,356,000,000
Current Cash 1,175,000,000
Current Liabilities 4,732,000,000
Current Debt 1,367,000,000
Non-Cash Working Capital (NCWC) 816,000,000
Change in NCWC 758,000,000
EBIT 2,521,000,000
Tax Provision -133,000,000
Depreciation and Amortization 1,056,000,000
Capital Expenditure -2,116,000,000
Unlevered Free Cash Flow 2,219,000,000
Current Assets 5,414,000,000
Current Cash 1,424,000,000
Current Liabilities 5,362,000,000
Current Debt 1,430,000,000
Non-Cash Working Capital (NCWC) 58,000,000
Change in NCWC -516,000,000
EBIT 2,405,000,000
Tax Provision 216,000,000
Depreciation and Amortization 1,068,000,000
Capital Expenditure -1,900,000,000
Unlevered Free Cash Flow -366,232,876
Current Assets 5,231,000,000
Current Cash 1,429,000,000
Current Liabilities 5,096,000,000
Current Debt 1,868,000,000
Non-Cash Working Capital (NCWC) 574,000,000
Change in NCWC -222,000,000
EBIT 1,981,000,000
Tax Provision 352,000,000
Depreciation and Amortization 1,045,000,000
Capital Expenditure -2,405,000,000
Unlevered Free Cash Flow -442,148,371
Current Assets 5,015,000,000
Current Cash 1,479,000,000
Current Liabilities 4,399,000,000
Current Debt 1,659,000,000
Non-Cash Working Capital (NCWC) 796,000,000
Change in NCWC -365,000,000
EBIT 2,420,000,000
Tax Provision 708,000,000
Depreciation and Amortization 1,003,000,000
Capital Expenditure -2,121,000,000
Unlevered Free Cash Flow 104,058,823
Current Assets 6,398,000,000
Current Cash 1,373,000,000
Current Liabilities 6,028,000,000
Current Debt 2,164,000,000
Non-Cash Working Capital (NCWC) 1,161,000,000
Change in NCWC 822,000,000
EBIT 2,320,000,000
Tax Provision 990,000,000
Depreciation and Amortization 1,169,000,000
Capital Expenditure -2,177,000,000
Unlevered Free Cash Flow 1,144,000,000
Current Assets 6,411,000,000
Current Cash 2,103,000,000
Current Liabilities 5,272,000,000
Current Debt 1,303,000,000
Non-Cash Working Capital (NCWC) 339,000,000
Change in NCWC -360,000,000
EBIT 2,275,000,000
Tax Provision -188,000,000
Depreciation and Amortization 1,176,000,000
Capital Expenditure -2,345,000,000
Unlevered Free Cash Flow 746,000,000
Current Assets 6,866,000,000
Current Cash 1,746,000,000
Current Liabilities 6,950,000,000
Current Debt 2,529,000,000
Non-Cash Working Capital (NCWC) 699,000,000
Change in NCWC -15,000,000
EBIT 2,775,000,000
Tax Provision 465,000,000
Depreciation and Amortization 1,144,000,000
Capital Expenditure -2,308,000,000
Unlevered Free Cash Flow 544,349,633
Current Assets 7,826,000,000
Current Cash 2,248,000,000
Current Liabilities 6,997,000,000
Current Debt 2,133,000,000
Non-Cash Working Capital (NCWC) 714,000,000
Change in NCWC 758,000,000
EBIT 2,920,000,000
Tax Provision 419,000,000
Depreciation and Amortization 1,245,000,000
Capital Expenditure -2,016,000,000
Unlevered Free Cash Flow 2,139,927,899
Current Assets 7,739,000,000
Current Cash 2,310,000,000
Current Liabilities 7,653,000,000
Current Debt 2,180,000,000
Non-Cash Working Capital (NCWC) -44,000,000
Change in NCWC -378,000,000
EBIT 3,052,000,000
Tax Provision 343,000,000
Depreciation and Amortization 1,294,000,000
Capital Expenditure -1,988,000,000
Unlevered Free Cash Flow 1,004,383,970
Current Assets 8,465,000,000
Current Cash 2,666,000,000
Current Liabilities 8,319,000,000
Current Debt 2,854,000,000
Non-Cash Working Capital (NCWC) 334,000,000
Change in NCWC 161,000,000
EBIT 3,447,000,000
Tax Provision 708,000,000
Depreciation and Amortization 1,394,000,000
Capital Expenditure -2,236,000,000
Unlevered Free Cash Flow 2,058,000,000

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