TacticScaleWhat AES Does & How It Makes Money (AES)
Updated October 2026 · reflects AES's latest reported financials
Global power generator and electric utility with a growing renewables portfolio. AES earns money by selling electricity it generates to utilities, industrial users and wholesale markets, and by charging end customers for electricity delivered through its regulated utilities.
How AES makes money
AES earns money by selling electricity it generates to utilities, industrial users and wholesale markets, and by charging end customers for electricity delivered through its regulated utilities.
What AES does
The AES Corporation, founded in 1981 as Applied Energy Services and based in Arlington, Virginia, is a power generation and utility company. It owns or operates about 34,740 megawatts of generating capacity using solar, hydro, wind, gas, coal, energy storage and landfill gas, and its utilities serve about 2.7 million customers. The business has four segments: Renewables, Utilities, Energy Infrastructure and New Energy Technologies. AES sells power to utilities, industrial users and wholesale markets, runs utilities that serve residential, commercial, industrial and government customers, and invests in greener energy technologies. It operates in the United States, Chile, Dominican Republic, El Salvador, Mexico, Bulgaria, Panama, Colombia, Argentina, Vietnam, Jordan, Puerto Rico and other countries.
Products & services
- Renewable power generation (solar, wind, hydro)
- Energy storage
- Gas and coal-fired power plants
- Electric utility distribution and transmission
- Wholesale electricity sales
- New energy technology investments
What is AES worth?
On an owner-earnings DCF, AES's most-likely value is about $7 versus a recent price near $15 (55% above fair value). But TacticScale only calls a stock undervalued when the price sits below its conservative no-growth floor (~$4) with a margin of safety — so the honest verdict here is “Fairly priced — no edge.” Fair value earns its keep only at the extremes, not in the wide middle.
Price sits in the normal range — fair value isn't actionable here; it earns its keep only when price drops below the no-growth floor, or runs to roughly double the optimistic case.
⚠ High leverage — net debt is 117.8× annual cash flow. Net debt is subtracted from this fair value, but refinancing at higher rates, principal timing, and share dilution aren’t modeled — the equity can be worth far less if cash flow weakens.
⚠ Capital-intensive — this business reinvests heavily, so free cash flow runs well below its earnings. Fair value here is built on free cash flow, which understates owner earnings for reinvestment-heavy companies — read it as conservative.
Analysis, not advice. Fair value is a margin-of-safety estimate from a deterministic owner-earnings DCF, not a price target or recommendation. See the full breakdown →
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