The AES Corporation is scored 56 for moat and 30 for management. The management score rests on a return on invested capital of 4.2% and a gross margin of 18.1% — figures that describe capital earning less than it costs to employ. The balance sheet carries debt at 4.40x equity, which magnifies both the returns above and the risk beneath them. A moderate moat alongside weak management is a combination worth understanding before the price matters at all.
The price anchors are built on deliberately conservative assumptions. Growth is modelled at 4.8% a year, below the 5.0% actually measured over the last decade — the model caps growth rather than extrapolating a good run forwards. The exit multiple assumed is 9.7x. That produces an intrinsic value of $10.08, a 10-CAP price of $4.27 and a payback time price of $4.25, with the value zone set at the highest of the three, $5.04. Today's price of $14.92 is 196% above it.
The price is above the value zone and the business scores 56 for moat and 30 for management. Neither test argues for paying up here.
| Price | $14.92 |
| Market cap | $10.6B |
| P/E ratio | 5.7x |
| Return on invested capital | 4.2% |
| Gross margin | 18.1% |
| Debt to equity | 4.40x |
| Free cash flow yield | -15.9% |
| Growth rate used | 4.8% |
| Growth rate measured | 5.0% |
| Exit multiple assumed | 9.7x |
| Company | Moat | Buy price |
| Clearway Energy Inc. (CWEN) | 29 | $64.03 |
| Alliant Energy (LNT) | 43 | $6.38 |
| SJW Group (SJW) | 55 | $10.18 |
| Middlesex Water Company (MSEX) | 33 | $16.15 |
Every number above is built on assumptions that can be changed. In Moatly you can move the growth rate, the exit multiple and the margin of safety and watch every figure recalculate, so you are testing your own view of The AES Corporation rather than accepting ours.