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Why the AGL share price has bounced today

Posted: 1 July 2021 2:15 pm

Shares in electricity giant AGL Energy are down 50% in the last 12 months.

Electricity giant AGL Energy has continued to be in the spotlight for a second straight session on Thursday. The stock bounced nearly 2% in early trade, and was still up 1.3% to $8.31 at the time of writing.

Why is the AGL stock price up?

AGL Energy shares suffered a savage sell-off on Wednesday after unveiling its plan for a demerger. AGL shares fell nearly 10% as a result, its biggest one-day fall since 2007.

Shareholders were disappointed about changes to dividend payouts and a subdued profit outlook.

It came after Australia's biggest electricity retailer said that it will split into a new company AGL Australia under Christine Corbett, while former chairman Graeme Hunt will lead a new coal-focused generator, Accel Energy.

Accel will retain a 15-20% stake in AGL Australia.

The company has been under pressure to remodel itself amid the challenges of lower power prices and an accelerating transition to renewables.

However, on Thursday, the stock has seen buying interest, placing it among the top traded stocks on the ASX, with investors likely focusing on the positive aspects of the previous day's announcement.

Earnings update

AGL reiterated that its underlying net profit after tax (NPAT) for FY21 would be in the middle of the $500 million to $580 million range previously outlined to the market.

It also said that earnings before interest, tax, depreciation and amortisation (EBITDA) for FY21 will be within the lower half of the previous range of $1.58 billion to $1.84 billion.

The result will be a vast improvement on the $2.28 billion statutory loss that it posted for the first half in February, after a hefty writedown due to unprofitable wind farm deals.

Investors are also hopeful that by carving out the carbon intensive part of its portfolio into the newly formed Accel Energy, the demerged retail and renewable focused AGL Australia business will attract a higher re-rating.

That would certainly be a relief for AGL Energy shareholders, who have seen a nearly 50% fall in the value of their holdings in the past year.

Considering buying AGL Energy shares?

If you are keen to buy shares in AGL Energy, you can invest through an online share trading platform.

Keep in mind that not all platforms offer the same list of stocks. Some offer US stocks only, so make sure to select a platform that offers ASX-listed stocks.

Choose from the dozens available for Australian investors. Compare the features and fees from the plethora of trading platforms available.

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Disclaimer: This information should not be interpreted as an endorsement of futures, stocks, ETFs, CFDs, options or any specific provider, service or offering. It should not be relied upon as investment advice or construed as providing recommendations of any kind. Futures, stocks, ETFs and options trading involves substantial risk of loss and therefore are not appropriate for all investors. Trading CFDs and forex on leverage comes with a higher risk of losing money rapidly. Past performance is not an indication of future results. Consider your own circumstances, and obtain your own advice, before making any trades.

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