Value
7.7/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 9.5 |
| P/S | 9.8 |
| EV/EBITDA | 4.2 |
| Fwd P/E | 9.8 |
| PEG | 10.0 |
| Analyst target | 3.0 |
- ▸Forward P/E: 6.1x
- ▸PEG: 0.01
- ▸Attractively valued
AES · Why this verdict
Why The AES (AES) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictSELL
Overall score5.4/10
ConfidenceMEDIUM
MacroNEUTRAL
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
At current prices, the stock is above the resistance-based take-profit level and the analyst consensus has been flagged as reached, with an implied -11.1% return to that consensus; the asymmetry ratio is negative, meaning estimated downside materially exceeds any near-term upside under current analyst expectations. Price targets | For the risk/reward to improve materially, analyst consensus targets would need to be revised upward to restore at least 15% positive upside from current prices; absent that revision, the setup does not justify new capital at risk. | →Stable |
| CounterThe company has beaten earnings estimates in 3 of 4 recent quarters with an average positive surprise of approximately 42%, including a 108% beat in the most recent quarter; sustained outperformance could prompt analysts to revise targets upward and restore positive asymmetry. | ||
Free cash flow is deeply negative at -219% of net income, meaning the company is consuming far more cash than its reported earnings generate; this structural gap between reported profitability and actual cash generation raises questions about dividend sustainability and how ongoing capital requirements are being funded. Quality breakdown | Free cash flow should turn positive within 4 quarters, with the ratio rising above zero, as a minimum necessary condition for the investment case to be considered fundamentally sound. | →Stable |
| CounterThe company has beaten estimates substantially in recent quarters, suggesting underlying operating performance may be stronger than the cash flow statement implies; the gap between reported earnings and cash may narrow as capital investment requirements moderate. | ||
Quality scores 3.4 out of 10, below the minimum acceptable floor of 4.0, with no identifiable competitive moat flagged; this leaves the business more vulnerable to operating deterioration than a higher-quality franchise, and the renewables generation capacity concentration of 54% adds a further high-severity risk layer. Warnings | Quality metrics should improve above 5.0 within 4 quarters — driven by margin improvement and balance sheet strengthening — as a necessary condition for the stock to be considered investable on quality grounds. | →Stable |
| CounterQuality metrics can recover quickly if margins expand; a 108% EPS beat in the most recent quarter suggests the operating business may be delivering better than the overall quality score implies, and a single strong earnings cycle could shift several quality components simultaneously. | ||
The put/call ratio of 2.57 indicates that options market participants are purchasing significantly more downside protection than upside exposure; simultaneously, analyst earnings estimates have been revised down by -19.5% over the past 30 days, creating a confluence of bearish signals from both the options market and the fundamental research community. Risk breakdown | If the underlying business stabilizes, the put/call ratio should fall below 1.0 and estimate revisions should turn positive within 2 quarters, signaling that bearish sentiment has peaked and the negative estimate revision cycle has ended. | →Stable |
| CounterElevated put/call ratios sometimes reflect hedging of existing positions rather than directional bearishness; a high level of put activity in a volatile environment could unwind quickly and create a technical tailwind if the company delivers a strong earnings quarter. | ||
At current prices, the stock is above the resistance-based take-profit level and the analyst consensus has been flagged as reached, with an implied -11.1% return to that consensus; the asymmetry ratio is negative, meaning estimated downside materially exceeds any near-term upside under current analyst expectations.
→StablePrice targets
- Expectation
- For the risk/reward to improve materially, analyst consensus targets would need to be revised upward to restore at least 15% positive upside from current prices; absent that revision, the setup does not justify new capital at risk.
CounterThe company has beaten earnings estimates in 3 of 4 recent quarters with an average positive surprise of approximately 42%, including a 108% beat in the most recent quarter; sustained outperformance could prompt analysts to revise targets upward and restore positive asymmetry.
Free cash flow is deeply negative at -219% of net income, meaning the company is consuming far more cash than its reported earnings generate; this structural gap between reported profitability and actual cash generation raises questions about dividend sustainability and how ongoing capital requirements are being funded.
→StableQuality breakdown
- Expectation
- Free cash flow should turn positive within 4 quarters, with the ratio rising above zero, as a minimum necessary condition for the investment case to be considered fundamentally sound.
CounterThe company has beaten estimates substantially in recent quarters, suggesting underlying operating performance may be stronger than the cash flow statement implies; the gap between reported earnings and cash may narrow as capital investment requirements moderate.
Quality scores 3.4 out of 10, below the minimum acceptable floor of 4.0, with no identifiable competitive moat flagged; this leaves the business more vulnerable to operating deterioration than a higher-quality franchise, and the renewables generation capacity concentration of 54% adds a further high-severity risk layer.
→StableWarnings
- Expectation
- Quality metrics should improve above 5.0 within 4 quarters — driven by margin improvement and balance sheet strengthening — as a necessary condition for the stock to be considered investable on quality grounds.
CounterQuality metrics can recover quickly if margins expand; a 108% EPS beat in the most recent quarter suggests the operating business may be delivering better than the overall quality score implies, and a single strong earnings cycle could shift several quality components simultaneously.
The put/call ratio of 2.57 indicates that options market participants are purchasing significantly more downside protection than upside exposure; simultaneously, analyst earnings estimates have been revised down by -19.5% over the past 30 days, creating a confluence of bearish signals from both the options market and the fundamental research community.
→StableRisk breakdown
- Expectation
- If the underlying business stabilizes, the put/call ratio should fall below 1.0 and estimate revisions should turn positive within 2 quarters, signaling that bearish sentiment has peaked and the negative estimate revision cycle has ended.
CounterElevated put/call ratios sometimes reflect hedging of existing positions rather than directional bearishness; a high level of put activity in a volatile environment could unwind quickly and create a technical tailwind if the company delivers a strong earnings quarter.
TrendMatrix Research · core thesis
Engine thesis — one sentence
AES Corporation trades above its resistance-based take-profit level with negative asymmetry, and the analyst consensus target has been reached with an implied -11.1% return to that consensus; quality scores 3.4 out of 10, below the 4.0 minimum acceptable floor, with no identifiable competitive moat, deeply negative free cash flow, and an elevated put/call ratio of 2.57 reinforcing cautious market positioning — the preponderance of signals points toward exit, not entry.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Per-dimension breakdown
Quality
3.4/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 1.8 |
| ROA | 1.8 |
| Gross margin | 0.0 |
| Op margin | 7.5 |
| Net margin | 5.4 |
| Current ratio | 2.9 |
| FCF quality | 0.0 |
| Moat | 4.2 |
| Piotroski F | 6.7 |
- ▸Earnings quality RED FLAG: -219% FCF/NI
- ▸No competitive moat
Growth
4.7/10data confidence 33%| Component | Sub-score |
|---|---|
| Rev growth | 4.7 |
Momentum
5.5/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 7.7 |
| MACD | 3.7 |
| OBV | 1.0 |
| MA position | 6.0 |
| Volume | 9.1 |
- ▸Uptrend pullback (RSI 38) - buy opportunity
- ▸Volume distribution (falling OBV)
- ▸Above 200-day MA
Sentiment
3.8/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 5.0 |
| Price target | 5.4 |
| erm sentiment | 0.0 |
- ▸Estimates falling as sentiment proxy (-19.5%)
Insider
5.0/10data confidence 50%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 5.1 |
- ▸No net insider activity — $0 (0.000% of mkt cap)
Peer rank
5.2/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 8.3 |
| quality rank | 4.2 |
| growth rank | 3.3 |
- ▸Attractive P/E vs peers
Technical
8.4/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 10.0 |
| support resistance | 8.4 |
| 52w position | 6.7 |
Risk (lower is worse)
6.8/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 8.0 |
| days to cover | 7.6 |
| volatility | 10.0 |
| put call | 8.1 |
| implied vol | 4.2 |
| beta | 7.3 |
| debt equity | 2.4 |
- ▸Concentration risks: 1 HIGH, 1 MED (10-K Item 1A — sized via position_sizing, validated via buy_confidence)
Catalyst
5.9/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 1.0 |
| earnings history | 6.7 |
| earnings timing | 5.0 |
| surprise avg | 10.0 |
| dividend safety | 7.0 |
- ▸Estimates down -19.5% (30d)
- ▸Strong earnings: 3B/1M
- ▸Dividend: 483.0%
How the verdict was assembled
Engine trigger
Quality below minimum threshold.
Engine technical detail
verdict_path:
L1:HARD_BLOCKPassed (6)
- MOMENTUM:5.5>=5.5
- INSIDER:OK
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:26d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (1)
- ASYMMETRY:-0.7=NEGATIVE
Warning (1)
- 8K_CSUITE_CHANGE:5.02 (officer departure/appointment)
Reward-to-Risk
-0.70
Upside
-10.5%
Downside
15.0%
Sizing output
AVOID
Setup— — No clear chart pattern; technical signals are mixed
EdgeCatalyst-Driven — Earnings in 26d with 3/4 beat streak
SuitabilityModerate — Balanced profile
Investment implication
The L1 gate blocked the positive-verdict path: a hard-floor threshold was breached, so dimensional pillars — including Technical at 8.4 could not lift the engine output above the verdict floor. Failed gate signal: ASYMMETRY:-0.7=NEGATIVE.
The strongest dimensions are Technical at 8.4, Value at 7.7, and Risk (lower is worse) at 6.8; the weakest are Quality at 3.4, Sentiment at 3.8, and Growth at 4.7. The V9 engine flagged 1 failed gate with 1 warning, producing an asymmetric reward-to-risk of -0.70 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Stock Above Take Profit Negative Geometry
Trip ifUpside to analyst consensus rises above 15%, restoring a clearly positive risk/reward profile.
- P2Deeply Negative Free Cash Flow
Trip ifFree cash flow rises above $0 for 2 consecutive reporting quarters.
- P3Below Quality Floor No Moat
Trip ifQuality score rises above 5.0 for 2 consecutive reporting periods, indicating the floor has been cleared with margin.
- P4Elevated Options Bearishness Estimate Cuts
Trip ifPut/call ratio falls below 1.0 for 4 consecutive weeks, signaling a shift to balanced or bullish options positioning.