Insights

Why did the AGL (ASX: AGL) share price have such a shocking FY22 first quarter?

We take a closer look at what went down during the past quarter for AGL Energy
The post Why did the AGL (ASX: AGL) share price have such a shocking FY22 first quarter? appeared first on The Motley Fool Australia. –

The disastrous long-term performance of the AGL Energy Limited (ASX: AGL) share price continued throughout the first quarter of FY22.

During the 3-month period, shares in the Australian energy company sank by about 29%. This underwhelming stint means shareholders are now down 50% since the beginning of the year.

Interestingly, other ASX-listed electricity providers didn’t perform nearly as badly as AGL. For comparison, Ausnet Services Ltd (ASX: AST) and Origin Energy Ltd (ASX: ORG) gained 44% and 5% respectively. Although, the largest utility company listed on the ASX, APA Group (ASX: APA), slipped 2% during the quarter.

Let’s take a look at what might have affected the AGL share price in Q1 FY22.

Pressures piling on

To AGL Energy, it might feel as though it is stuck between a rock and a hard place. The combination of discontent towards its recent poor financial results — and the increasing pressure to transition its business to a more climate-friendly one — likely seem paradoxical to the management team.

In its FY21 results, the company’s managing director and CEO, Graeme Hunt, highlighted the period as one of the toughest energy markets in its history. This was partly due to incredibly high wholesale electricity prices, the likes of which have not been seen since 2012. Furthermore, the shift from legacy gas suppliers to new contracts resulted in higher wholesale gas supply prices. Likely, these combining factors weighed on the AGL share price during the quarter.

Simultaneously, the company forked out large sums of capital to address its integration of more renewables. This made a dent in AGL’s earnings before interest, tax, depreciation, and amortisation (EBITDA). In FY21, EBITDA fell 21% to $1,630 million.

On top of this, the company has been under the scrutiny of the Australian Shareholders Association (ASA). As my colleague Zach covered, ASA and other shareholders voted in favour of AGL setting short and long-term emissions targets in line with the Paris Agreement. However, the outcome is more of an advisable movement, rather than a ‘must do’ instruction.

Looking ahead for the AGL share price

As most investors would be aware, past performance is not an indication of future performance. It appears one analyst is putting that notion into action. Recently, analysts at Ord Minnet outlined their forecast for the AGL share price.

According to the broker note, the broker has slapped a buy rating on the energy company’s shares with a price target of $7.55. For context, at the time of writing shares in AGL are fetching $6.07 apiece. This indicates a potential 24% upside in the eyes of the broker.

The post Why did the AGL (ASX: AGL) share price have such a shocking FY22 first quarter? appeared first on The Motley Fool Australia.

Should you invest $1,000 in AGL Energy right now?

Before you consider AGL Energy, you’ll want to hear this.

Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and AGL Energy wasn’t one of them.

The online investing service he’s run for nearly a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.

*Returns as of August 16th 2021

More reading

Why this broker sees 30% upside for the AGL (ASX:AGL) share price
Why did the AGL share price have such a lousy month in September?

3 ASX 200 shares down more than 50% in 2021

Why is the AGL (ASX:AGL) share price down almost 4% on Tuesday?
How has the AGL (ASX:AGL) share price performed since reporting FY21 results?

Motley Fool contributor Mitchell Lawler 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 owns shares of and has recommended APA Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

Trade The World Anywhere & Anytime!

Mobile app platform with over 50,000 global listed securities across 12 markets (over 70% global market capitalisation), right from your Android or iOS device.

Integrated with exclusive trading idea and investment analysis tools to help you find actionable insight on virtually every financial instrument across our 12 global markets, to help you optimise your trading strategies.

Refer Your Friends

Tell your friends about Monex and gift them FREE access to our trading tools.

We respect your privacy and will only send this one email notification to your friends. 

Share With Your Friends

Share on facebook
Share on twitter
Share on linkedin

Monex Trading Tools Access and Usage Terms

The Monex Trading Tools (referred to as ‘tools’ hereafter) are available to you inside your client portal;


To activate access to the tools, you must have a verified and approved trading account and have made a deposit of at least AUD $1000.


An active and funded account with a positive trading balance is required to continue to have access to the tools;


Although the tools are available to you indefinitely, Monex Securities may at it’s discretion disable access to the tools in the future;


Monex securities reserves the right to change these terms and conditions from time to time, as it sees fit, without notice.

Important Notice
iOS & Android App - 12 International Markets & Over 70% Global Market Cap. $0 Brokerage On US Trades. Click Here!