The AGL Energy Limited (ASX: AGL) share price closed the session on Thursday up 0.45% to $11.20.
Earlier in the day, AGL shares hit a two-year high of $11.33 per share.
The ASX 200 utilities stock was among many shares in green territory today, with the S&P/ASX 200 Index (ASX: XJO) delivering an outstanding performance.
The AGL share price is up an impressive 35% over the past 12 months. That’s well beyond the performance of the S&P/ASX 200 Utilities Index (ASX: XUJ), which is up 17.6%.
What’s firing up the AGL share price?
The AGL share price has had a particularly great run over the past six months, soaring 44%.
This followed a shocker run in 2022 when the company dealt with a shareholder revolt led by Mike Cannon-Brookes.
But times have changed, and 2023 has brought better fortunes.
In June, AGL released an update revising higher its guidance for FY23.
Not only that, it said its FY24 underlying profit after tax should be more than double that of FY23.
The company is projecting underlying profit after tax of $580 million in FY23 and $780 million in FY24.
This would be a 115% to 189% increase over the midpoint of its FY23 underlying profit after tax guidance.
AGL benefits from higher electricity prices
AGL attributed its optimistic outlook to two key factors.
The first is “sustained periods of higher wholesale electricity pricing, reflected in pricing outcomes and reset through contract positions”.
The second is “expected improved plant availability and flexibility of the asset fleet”. This included starting operations of the Torrens Island and the Broken Hill batteries and “the non-recurrence of forced outages and market volatility impacts from July 2022” of about $130 million before tax.
Will AGL shares be worth owning in FY24? This question was posed by my Fool colleague Tristan late last month.
Tristan points out that the forward price-to-earnings (P/E) ratio could sit at just 10x if AGL achieves its upgraded guidance.
