AGL Energy (ASX:AGL) Earnings Jump Raises The Question Of Whether The Stock Is Still Cheap
AGL Energy (ASX:AGL) has come into focus after its full year 2026 results, which showed A$13,590 million in sales and A$756 million in net income, along with a higher dividend payout ratio target for FY27.
See our latest analysis for AGL Energy.
AGL Energy's share price has risen 7.3% over the past 30 days and 7.2% over the last week, while the year-to-date share price return is down 5.5% and the 1 year total shareholder return is 6.8%. This points to improving short term momentum following the full year 2026 profit update and higher dividend payout ratio target.
If this earnings story has you looking at the wider energy and utilities space, it could be a good time to check out 36 power grid technology and infrastructure stocks
AGL Energy’s recent share price move came alongside a sharp rise in statutory profit that was heavily influenced by asset sales and higher payout ambitions. How much of the current valuation rests on those one off factors versus the core business?
Price-to-Earnings of 7.8x: Is it justified for AGL Energy?
On Simply Wall St’s numbers, AGL Energy trades on a P/E of 7.8x while our SWS DCF model points to an estimate of A$16.28 per share against a last close of A$8.82. That combination suggests the market is valuing AGL very cautiously compared with both its modelled cash flows and peers.
The P/E ratio compares AGL Energy’s current share price to its earnings per share. For a large integrated utility that owns generation assets, retail operations and energy infrastructure, this is a common way investors compare what they are paying for each dollar of earnings across the sector.
According to the Simply Wall St checks, AGL is described as trading at good value compared to peers and the wider Integrated Utilities industry on this 7.8x P/E. The same checks also flag that this ratio is low compared to an estimated fair P/E of 26.6x that is based on a regression of fundamentals. This points to a level the market could move towards if expectations were to align with that model.
AGL’s 7.8x P/E is set against a global Integrated Utilities industry average of 18.5x and a peer average of 33.3x. This represents a steep discount on both measures. Compared with the estimated fair P/E of 26.6x, the current multiple is also well below the level suggested by the fair ratio model.
Explore the SWS fair ratio for AGL Energy
Result: Price-to-Earnings of 7.8x (UNDERVALUED)
However, AGL Energy still faces questions around one-off asset sale impacts on profit and how sustainable the higher dividend payout ambitions will be over time.
Find out about the key risks to this AGL Energy narrative.
Another view on AGL Energy’s value using cash flows
While the 7.8x P/E paints AGL Energy as cheap against peers and its own fair ratio, the SWS DCF model goes further. It estimates fair value at A$16.28 per share versus a last close of A$8.82, which also points to undervaluation. The real question is how comfortable you are with the cash flow assumptions sitting underneath that gap.
Look into how the SWS DCF model arrives at its fair value.
Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out AGL Energy for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 10 high quality undervalued stocks. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.
Next Steps
AGL Energy has a mix of encouraging signals and open questions, so it makes sense to check the numbers yourself and move quickly while the latest data is fresh. To see both sides laid out clearly, including the key risks investors worry about and the rewards they are optimistic about, start with these 3 key rewards and 3 important warning signs
Looking for more investment ideas beyond AGL Energy?
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- Hunt for potential bargains using the screener containing 11 high quality undiscovered gems that focuses on strong fundamentals which the market may be overlooking.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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