The AGL Energy Limited (ASX: AGL) share price has gone up 6.5% in reaction to a positive FY24 update.
AGL is one of the largest energy retailers and generators of energy in Australia.
Upgraded FY24 guidance
The energy company updated its guidance for the 2024 financial year ending 30 June 2024. We’ve already seen a solid HY24 result.
Underlying EBITDA is now expected to be between $2.12 billion to $2.2 billion, compared to the previous guidance range of $2.025 billion to $2.175 billion. That means it’s expecting underlying EBITDA to between 1.1% to 4.7% more than previously forecast.
The underlying net profit after tax (NPAT) is expected to be between $760 million to $810 million, which compared to the previous guidance of between $680 million and $780 million. That means the underlying NPAT guidance was increased between 3.8% to 11.75%. The amount of profit that AGL makes is integral to the AGL share price.
AGL explained the update to the guidance reflected the continued “strong operational and financial performance of the business” since the half year result.
This increased guidance was due to improved power plant availability, flexibility, and generation, higher consumer demand over the summer period in New South Wales and Queensland, and continued strong performance with its customer markets.
AGL noted all guidance is subject to any impacts coming from regulatory and government intervention, variability in trading conditions and plant availability.
Is the AGL share price a buy?
Investors clearly thought so, with the AGL share price rising so much in response to the update.
I don’t know what energy prices are going to do in the coming months and years, but I think energy demand could keep increasing in Australia with a growing population and a rising amount of technology-related usage in the country (such as electric vehicles and data centres).
The AGL share price may still underappreciated, despite today’s rise, depending on what happens with energy prices. It’s not exactly a high-growth pick, but I think some investors may be too cautious on the company.
