Using an unlevered Free Cash Flow to Firm (FCFF) model, we project The AES Corporation's cash flows over 5 years with line-by-line expense modeling. Revenue is projected revenue growing from 1.7% to 2.4% annually, with expenses (COGS, SG&A, R&D) held at historical ratios. Depreciation is computed from a vintage matrix based on a 5-year useful life. Working capital is modeled using historical turnover days (DSO 48, DPO 83, DIO 27). At a 5.2% WACC with mid-year discounting, the terminal value (88% of enterprise value) is derived by applying the industry peer median EV/EBITDA multiple of 13.5x to Year 6 EBITDA. After subtracting net debt, the equity value implies a fair price of $98.37 per share, suggesting AES is undervalued by 601.6% at the current price of $14.02.
Adjust parameters to explore scenarios. Changes are for exploration only and do not affect saved valuations.
| 2026 | 2027 | 2028 | 2029 | 2030 | Terminal | |
|---|---|---|---|---|---|---|
| Profit Before Tax | 1,041 | 1,071 | 1,017 | 1,041 | 1,065 | 1,092 |
| (−) Net Interest | 1,244 | 1,281 | 1,216 | 1,244 | 1,274 | 1,306 |
| (+) D&A | 5,542 | 6,238 | 6,478 | 6,026 | 5,666 | 5,808 |
| EBITDA | 7,828 | 8,590 | 8,711 | 8,311 | 8,005 | 8,205 |
| (−) Tax | 0 | 0 | 0 | 0 | 0 | — |
| (−) CapEx | 5,592 | 5,755 | 5,463 | 5,592 | 5,724 | — |
| (−) ΔWC | -270 | 3 | -6 | 3 | 3 | — |
| Free Cash Flow (FCF) | 2,506 | 2,831 | 3,254 | 2,717 | 2,279 | — |
| Peers' EBITDA Multiple | 13.5x | |||||
| Terminal Value | 110,937 | |||||
| WACC / Discount Rate | 5.16% | |||||
| Timing of FCF (mid year) | 0.5 | 1.5 | 2.5 | 3.5 | 4.5 | 5 |
| Present Value of FCF | 2,444 | 2,625 | 2,870 | 2,278 | 1,817 | 86,253 |
| Enterprise Value | 98,287 | |||||
| Projection Period | 12,034 | 12.2% | ||||
| Terminal Value | 86,253 | 87.8% | ||||
| (−) Current Net Debt | 28,254 | |||||
| Equity Value | 70,033 | |||||
| (÷) Outstanding Shares | 712M | |||||
| Fair Price | $98 | +601.6% | ||||
| WACC \ EV/EBITDA Exit Multiple | 9.5x | 11.5x | 13.5x | 15.5x | 17.5x |
|---|---|---|---|---|---|
| 3.2% | $72 | $92 | $111 | $131 | $151 |
| 4.2% | $67 | $86 | $105 | $123 | $142 |
| 5.2% | $63 | $80 | $98 | $116 | $134 |
| 6.2% | $58 | $75 | $92 | $109 | $127 |
| 7.2% | $54 | $70 | $87 | $103 | $119 |
Current price: $14.02. Green = undervalued, Red = overvalued.
Based on default parameters
This is an unlevered Free Cash Flow to Firm (FCFF) model with a 5-year projection period. Revenue, expenses, D&A, and working capital are projected using the same line-by-line approach as the Growth Exit models. The key difference is the terminal value methodology: instead of assuming perpetual cash flow growth, the terminal value is calculated by applying the industry peer median EV/EBITDA multiple to the projected Year 6 EBITDA.
Using a peer exit multiple anchors the terminal value to how the market currently prices comparable companies, rather than relying on a theoretical perpetual growth assumption. This approach captures relative valuation dynamics and is particularly useful when a company is expected to converge toward industry-average profitability over time. The sensitivity matrix shows how fair value changes across different WACC and EV/EBITDA multiple scenarios.