The AGL (ASX:AGL) share price has bounced 10% this month

This is on top of the other numerous battles it has had to fight

| More on:
Power lines with a sunset in the background

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The AGL Energy Limited (ASX: AGL) share price has bounced more than 10% since the start of this month. Despite the strong performance, shares in the electricity operator are still down more than 25% for the year.

Read on to find out what's been shaping the AGL share price.

AGL share price at multi-decade low

The AGL share price has been in a world of hurt the past few years. The energy operator has had to fight numerous battles. These include a struggling national electricity market, unstable electricity prices and declining value of its energy generation assets.

Recently, the AGL share price has had to battle numerous headwinds. In addition to macro challenges, the company has had to deal with the sudden exit of its CEO. The company also lost a high-profile Federal Court case against Greenpeace Australia Pacific.

Why is the AGL share price trading higher in June?

Since the company has not released any price-sensitive news, the recent spike in the AGL share price could be attributed to multiple factors.

Investors could be jumping the gun early as they await a line-up of CEO's. Following the departure of Brett Redman in late April, AGL had promised to update the market by June 30 on likely CEO's who would take up the position.

In addition, investors could be jumping on AGL's planned restructuring which the company announced back in March. According to AGL, the company plans to create 2 leading energy businesses via a structural split.

Under the proposed separation, the company will split into 'New AGL' and PrimeCo. New AGL will be focused on multi-product energy and will control the retail assets. On the other hand, PrimeCo is earmarked to be Australia's largest electricity generator housing the company's coal electricity-generating assets.  

What is the outlook for AGL?

Earlier this year, AGL reaffirmed full-year guidance of $500 to $580 million. In addition, the company issued guidance for 2021 underlying earnings of between $1.585 billion and $1.845 billion.

Analysts and investors have had their premonitions on what the outlook is for AGL. The sudden departure of the company's CEO has raised concerns about the company's proposed strategy and the likely success of the separation.

In addition, there have been lingering doubts on how AGL can distribute $2.8 billion of debt in the restructure, whilst retaining investment-grade credit ratings for both.

Despite the headwinds, AGL expects the structural separation to be completed by the end of 2021.

Motley Fool contributor Nikhil Gangaram 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.

More on Energy Shares

Happy coal miner.
Share Gainers

Up 75% this week, why is this ASX All Ords stock rocketing again today?

Investors are piling into this ASX 300 stock on Wednesday. But why?

Read more »

Man pointing at a blue rising share price graph.
Share Gainers

Guess which ASX 300 stock just rocketed 43% on big news!

Investors are piling into this ASX 300 stock on Wednesday. But why?

Read more »

A male oil and gas mechanic wearing a white hardhat walks along a steel platform above a series of gas pipes in a gas plant
Energy Shares

4 reasons to buy Santos shares right now

A leading expert forecasts Santos shares and dividends are set to grow. But why?

Read more »

Man with rocket wings which have flames coming out of them.
Share Gainers

Guess which ASX 200 stock has rocketed 86% since April?

This sky rocketing ASX 200 stock continues to defy short sellers. But how?

Read more »

A miner in visibility gear and hard hat looks seriously at an iPad device in a field where oil mining equipment is visible in the background.
Energy Shares

4 ASX 200 energy shares making big moves today as OPEC's oil production set to surge

ASX energy shares, including Woodside and Santos, are making big moves today. But not all in the same direction.

Read more »

Worker on a laptop at an oil and gas pipeline.
Energy Shares

Woodside share price charging higher on North West Shelf approval

Woodside has been working more than six years to gain an extension for its North West Shelf gas project.

Read more »

Gas and oil plant with a inspector in the background.
Energy Shares

Does Macquarie rate Origin Energy shares a buy, hold or sell?

The broker has given its verdict on the energy giant. Let's see what it is saying.

Read more »

An oil worker in front of a pumpjack using a tablet PC.
Energy Shares

Ord Minnett tips Woodside shares to rise 15%+

Market-beating returns could be on offer from this energy giant.

Read more »