Is The AES Corp. overvalued or undervalued?

As of 28 February 2025, the valuation grade for The AES Corp. moved from risky to very attractive, indicating a significant improvement in its perceived value. The company appears to be undervalued, especially when considering its P/E ratio of 10, which is notably lower than the industry average of approximately 25.3, and its EV to EBITDA ratio of 11.95, which also suggests a favorable valuation relative to peers. Additionally, the company boasts a high dividend yield of 372.12%, which is an attractive feature for investors.
In comparison to its peers, The AES Corp. has a P/E ratio of 10, while the industry average is around 25.3, highlighting its undervaluation. Furthermore, its EV to EBITDA ratio of 11.95 is competitive against the peer average of 12.64. Despite the attractive valuation metrics, the company's recent stock performance has lagged behind the S&P 500, with a 1-year return of -32.76% compared to the S&P 500's 17.14%, and a 5-year return of -31.08% against the S&P 500's 96.61%. This suggests that while the stock may be undervalued, it has faced significant challenges in the market.