Why AES Corp. Stock Popped Today
Key Takeaways
AES is pricier than it looks. Two M&A specialists might decide to buy it anyway.
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investment
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July 9, 2025
11:03 AM
The Motley Fool
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AES is pricier than it looks
Two M&A specialists might decide to buy it anyway
For two weeks straight, s of electric utility AES Corp. 01%) stock have climbed, all on no obvious news -- but today we found out why this stock was hopping
As Barron's reports, AES is "exploring its options, including a possible sale" to one or several "large investment firms. " And so, after two weeks of steady gains, AES took another leap higher this morning, soaring 16% through 10:10 a
Image source: Getty Images
Bloomberg News reports that two investment firms may bid to buy AES: Brookfield Asset Management and BlackRock's Global Infrastructure Partners
And why would they want it
For one thing, AES is viewed as a play on rising demand for electricity to power artificial intelligence data centers
For another, despite its recent, mysterious gains, AES stock remains down 38% over the past year
It makes sense that with AES stock so much cheaper than it once was, mergers and acquisitions specialists might begin wondering if AES is cheap enough to buy
And valued at just 6 times trailing earnings and only 5 times forward earnings, AES stock certainly looks cheap
But case a buyout does not happen, beware: This cheapness comes with caveats
First and foremost, AES carries a boatload of net debt, nearly $30 billion worth
That's enough to push the stock's $7. 9 billion market capitalization up to $37. 3 billion when calculated as enterprise value
Relative to the $1. 3 billion AES earned over the past year, that means the stock trades for a steep enterprise value of 27 times earnings
The stock's even pricier when valued on free cash flow
This may not frighten off Brookfield and BlackRock, but it does worry me
Rich Smith has no position in any of the stocks mentioned
The Motley Fool recommends Brookfield Asset Management
The Motley Fool has a disclosure policy.
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