Market response to AGL Energy Ltd (AGL)
Hi Team, AGL has got smashed today in what appears to be inline figures. I realise there was some abnormal, however the response by market seems excessive. Appreciate your views. Regards Jeff
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Answer
Hi Jeff,
The 13% drop certainly felt a little excessive on the day, but not by a lot. Their guidance for FY26 was around 10% below our expectation. They reduced the 2H dividend to 25c (from 35c), though this was expected.
Moving forward, AGL’s dividend is likely to remain at the low end of its policy range (50-70%) for the foreseeable future, as its battery investment reduces its free cashflow, but on ~50c pa, we view this as attractive.
- We’re not a seller here, and if we didn’t own the stock, we’d be a buyer, though we’d likely wait until after they trade ex-dividend, looking to pick the stock up below $8.50.
