AGL Energy (ASX:AGL) share price hits 19-year low

AGL shares just keep falling…

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Well, this Monday certainly hasn’t started the week in the way that many investors would have hoped it would. At the time of writing, the S&P/ASX 200 Index (ASX: XJO) is down by roughly 0.7% to 7,470 points. However, one ASX 200 share is doing far worse. That would be the AGL Energy Limited (ASX: AGL) share price.

AGL shares are currently down a nasty 1.25% to $6.33 a share at the time of writing. But earlier in the trading day, this energy generator and retailer was down all the way to $6.22 a share, a loss of 2.5%.

$6.22 a share is both a new 52-week low, and a 19-year low for AGL. And that’s saying something for a company that is more than 180 years old. 

By this writer’s rough calculations, you have to go back to September 2002 to find the last time AGL shares were trading at the current level.

Today’s new low also means that the AGL share price is now down around 47.7% year to date. As well as by 57.8% over the past 12 months. The company is also down a painful 77% from its most recent all-time high. This was around $27.70 and was hit way back in April 2017.

Why is the AGL share price at a 19-year low?

As you might have gathered, AGL shares have been under enormous pressure over 2021. For one, the company made several downward revisions to its earnings guidance for FY21 before finally releasing its numbers last month.

The company ended up reporting a statutory loss of more than $2 billion. Revenues were down by 10% over the previous year to $10.9 billion. Underlying earnings per share (EPS) also fell by 31.6% to 86.2 cents.

At the time, AGL CEO Graeme Hunt blamed the results on a number of factors. Here’s some of what he said on these results at the time:

Our FY21 result reflects a challenging year for AGL Energy as we realised the impact of lower wholesale electricity prices, reduced electricity generation output at peak periods, and the roll-off of legacy supply contracts in Wholesale Gas…

Our result reflected the impact over the past two years of increasing generation supply and lower demand arising from the COVID-19 pandemic and milder weather.

With a series of earnings downgrades leading up to this report, which was also not too well received from investors, it’s perhaps no surprise the AGL share price has struggled in recent times.

Accel Energy demerger plans fail to inspire investors

But another anchor that seems to have attached itself to the AGL share price has been the company’s upcoming plans for a demerger. On 30 June, the company announced that it plans to separate its generational assets from its retailing business in a brand new company. This new company will be called Accel Energy. AGL is anticipating that this demerger will be completed by the fourth quarter of FY22.

AGL clearly thinks this demerger is in the best interests of shareholders. Even so, we can’t ignore how the AGL share price has fallen more than 30% since this announcement was made public. It’s fair to say the market has concerns here.

At the current AGL share price, the company has a market capitalisation of $3.95 billion. It also has a dividend yield of 10.25%.


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Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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