Earnings Preview For The AES Corporation (AES, DUK, PGN, DPL, EXC, CEG)

The AES Corporation AES is expected to announce its Q1 earnings results on Monday, May 9, before the markets open. Analysts are expecting earnings per share will be $0.26, the same as a year ago. In the last 30 days, the consensus estimate was upgraded by $0.03. Revenues are predicted to stand at $3.63 billion, down 11.8% year-over-year. The AES Corporation is a global power company. As of December 31, 2010, AES owned a portfolio of electricity generation and distribution businesses on five continents in 28 countries, with total capacity of approximately 40,500 megawatts and distribution networks serving over 12 million people. Looking ahead, earning per share is expected to rise to $0.28 in Q2, an increase of 21.7% on a yearly basis. For the whole year, earnings per share is predicted to be $1.06, 12.8% more than a year ago. On the other hand, revenues are expected to keep falling in the first half of the year, before recovering in the second part. For Q2, analysts expect a decline of 11% to $3.58 billion. AES' 2011 revenues should be higher than in the previous year, however. Analysts expect 2011 revenues to reach $16.76 billion, up 0.7% on the last year's level. Investors will be monitoring AES' experimenting with using lithium-ion batteries as energy storage for the power grid. According to Reuters, AES is in the process of scaling up its lithium-ion grid battery projects to a commercial size. The first results of this project are expected to be seen in the third quarter of this year, when AES plans to start operating a 32 MW lithium-ion battery project in conjunction with grid operator PJM in West Virginia. Utility sector is becoming increasingly concentrated, following a series of acquisitions. Earlier this year, Duke Energy DUK attempted to take control of Progress Energy PGN for $13.7 billion and the AES Corporation struck a $3.5 billion deal with DPL DPL. The latest deal includes Exelon Corporation's EXC acquisition of its rival, Constellation Energy Group CEG, for $7.9 billion. Even though AES is following the trend of acquiring smaller competitors, it is worth noticing that AES' acquisition is much smaller compared to that of its rivals. Investors will be interested to see if that might be a source of competitive disadvantage for AES in the months to follow. Duke Energy posted better than expected Q1 results last week, putting some pressure on AES to follow suit. Investors might be further worried after AES failed to meet analysts' expectations in the last two quarters by as much as 23%. Rating agencies generally have a positive outlook on AES' shares. At the moment, four agencies have a Buy or Strong Buy on its shares, while two have a Hold. In the last 90 days, AES added 3.03% to its value to close last week at $12.93.