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AGL Energy Ltd AGL

Rating as of

Morningstar’s Analysis

Currency in AUD
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5-Star Price


Economic Moat


Capital Allocation


Global Energy Crisis Could be a Catalyst for AGL

Adrian Atkins Senior Equity Analyst

Analyst Note

| Adrian Atkins |

We upgrade narrow-moat AGL Energy's near-term earnings forecasts to factor in wholesale electricity prices remaining at decent levels in the past few months, which should flow through to retail prices next year. Our longer-term forecasts are largely unchanged, and we maintain our AUD 14 per share fair value estimate. While risky, we consider the stock materially undervalued at current prices. Sky-high prices for coal and LNG exports should put upward pressure on domestic electricity prices in the medium term, creating a more favourable environment for AGL. Additionally, the current global energy crisis strengthens the case for coal power stations to receive capacity payments. This would ensure they make adequate returns and continue operating for as long as needed to enable an orderly transition to renewable energy.

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Company Profile

Business Description

AGL Energy is one of Australia's largest retailers of electricity and gas. It services 3.7 million retail electricity and gas accounts in the eastern and southern Australian states, 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 peaking, intermediate, and base-load electricity generation plants, with a combined capacity of 10,500 megawatts.

200 George Street, Level 24
Sydney, NSW, 2000, Australia
T +61 299212999
Sector Utilities
Industry Utilities - Independent Power Producers
Most Recent Earnings
Fiscal Year End Jun 30, 2022
Stock Type
Employees 3,358