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AGL Energy Ltd AGL

Morningstar Rating
A$8.34 +0.07 (0.85%)
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Company Report

AGL Energy: Downgrading to No Moat to Reflect Diminishing Duration of Cost Advantage

We downgrade AGL Energy’s Morningstar Economic Moat Rating to none, from narrow. The firm’s narrow moat was underpinned by the cost advantage enjoyed by its coal power stations. While this cost advantage is unchallenged for now, Morningstar requires competitive advantages to persist for more than 10 years to award a narrow moat rating. With its coal power stations scheduled to close in the early to mid-2030s and replacement generation assets unlikely to be competitively advantaged, it is time to remove AGL’s moat. Weak Victorian electricity futures prices also detract from expected returns in the medium term.

Price vs Fair Value

AGL is trading at a 28% discount.
Price
A$8.31
Fair Value
A$54.50
Uncertainty
High
1-Star Price
A$66.28
5-Star Price
A$1.50
Economic Moat
Tykdw
Capital Allocation
Tptx

Bulls Say, Bears Say

Bulls

As AGL Energy is a provider of an essential product, earnings should prove somewhat defensive.

Bears

The regulatory environment is unpredictable and has a significant impact on AGL Energy's earnings.

Is it the right time to buy, sell, or hold?
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Trading Information

Previous Close Price
A$8.27
Day Range
A$8.268.40
52-Week Range
A$7.7112.45
Bid/Ask
A$8.34 / A$8.39
Market Cap
A$5.61 Bil
Volume/Avg
2.2 Mil / 2.9 Mil

Key Statistics

Price/Earnings (Normalized)
17.91
Price/Sales
0.46
Dividend Yield (Trailing)
5.88%
Dividend Yield (Forward)
5.88%
Total Yield
5.93%

Company Profile

AGL Energy is one of Australia's largest retailers of electricity and gas. It services over 4 million retail electricity and gas accounts in Australian, or about one third of the market. Profit is dominated by energy generation, underpinned by its low-cost coal-fired generation fleet. Founded in 1837, it is the oldest company on the ASX. Generation capacity comprises a portfolio of renewable, peaking, intermediate, and base-load electricity generation plants.
Sector
Utilities
Industry
Utilities - Independent Power Producers
Stock Style Box
Mid Value
Total Number of Employees
3,358

Competitors

Valuation

Metric
AGL
ORG
MEL
Price/Earnings (Normalized)
17.9110.1750.72
Price/Book Value
1.021.722.60
Price/Sales
0.461.024.04
Price/Cash Flow
3.3727.92
Price/Earnings
AGL
ORG
MEL

Financial Strength

Metric
AGL
ORG
MEL
Quick Ratio
0.800.830.67
Current Ratio
1.091.150.94
Interest Coverage
1.6312.251.75
Quick Ratio
AGL
ORG
MEL

Profitability

Metric
AGL
ORG
MEL
Return on Assets (Normalized)
3.90%7.45%0.79%
Return on Equity (Normalized)
11.11%16.24%1.34%
Return on Invested Capital (Normalized)
7.09%12.39%1.00%
Return on Assets
AGL
ORG
MEL
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Utilities - Independent Power Producers Industry Comparables

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Capital Allocation
Economic Moat
Market Cap
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HUNGF
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HGKGY
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HGKGF
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CRPJY
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CPYYF
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CPYYY
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DIPGF
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