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Algonquin Power (TSE:AQN)
:AQN
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Algonquin Power & Utilities
(NYSE:AQN)
51Neutral
Positive Factors
Leadership
Investors are encouraged with new CEO Rod West's potential impact on the company, including bridging the current realized ROE towards allowed weighted average or potential EPS power with accelerated reductions in regulatory lag and operational efficiency.
Valuation
Analyst maintains Outperform rating and US$5 target price, combined with the attractive relative valuation of AQN compared to its utility peers.
Negative Factors
Financial Performance
AQN stock initially sold off aggressively at the open, down as much as ~10.0%, due to the EPS miss, lack of 2025 guidance, and expected delay in the Empire Electric Missouri rate decision.
Guidance
AQN did not unveil its formal 2025 guidance with Q4/24 results as previously messaged, which disappointed the market.
Algonquin Power & Utilities (AQN) vs. S&P 500 (SPY)
Market Cap
C$5.54B
Dividend Yield5.86%
Average Volume (3M)3.00M
Price to Earnings (P/E)―
Beta (1Y)1.24
Revenue Growth-6.72%
EPS Growth-6766.85%
CountryCA
Employees3,786
SectorUtilities
Sector Strength85
IndustryRenewable Utilities
Share Statistics
EPS (TTM)-2.45
Shares Outstanding767,452,450
10 Day Avg. Volume3,365,896
30 Day Avg. Volume3,001,118
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)1.68
Price to Cash Flow (P/CF)20.30
P/FCF Ratio0.00
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
C$7.19Price Target Upside-0.43% Downside
Rating ConsensusHold
Number of Analyst Covering7
Algonquin Power & Utilities Business Overview & Revenue Model
Company DescriptionAlgonquin Power & Utilities Corp., through its subsidiaries, owns and operates a portfolio of regulated and non-regulated generation, distribution, and transmission utility assets. The company operates through two segments, Regulated Services Group and Renewable Energy Group. The Regulated Services Group segment operates a portfolio of rate-regulated utilities located in the United States, Canada, Chile, and Bermuda. Its utilities provide distribution services to approximately 1,093,000 customer connections in the electric, natural gas, and water and wastewater sectors The Renewable Energy Group segment generates and sells electrical energy, capacity, ancillary products, and renewable attributes produced by its portfolio of renewable and clean power generation facilities primarily in the United States and Canada. It owns and operates hydroelectric, wind, solar, and thermal facilities; and owns and operates a portfolio of clean energy and water infrastructure assets. The company was incorporated in 1988 and is headquartered in Oakville, Canada.
How the Company Makes MoneyAlgonquin Power & Utilities Corp. generates revenue through its two main business segments. The renewable energy segment earns money by selling the electricity it generates from its portfolio of renewable power facilities to utilities and other customers under long-term power purchase agreements (PPAs), which provide stable and predictable cash flows. The regulated services segment generates revenue from the distribution of water, electricity, and natural gas to residential, commercial, and industrial customers. This segment benefits from regulated rate structures that ensure a return on investment and cover operational costs. Additionally, AQN has strategic partnerships and acquisitions that expand its market reach and enhance its revenue-generating capabilities, contributing to overall earnings growth.
Algonquin Power & Utilities Financial Statement Overview
Summary
Algonquin Power & Utilities is experiencing financial difficulties characterized by declining revenues, net income losses, and increasing debt levels. While there are operational efficiencies, they are overshadowed by the high leverage and negative cash flow trends. The company needs strategic adjustments to improve profitability and strengthen its financial position.Income Statement
Algonquin Power & Utilities shows fluctuating revenue trends over the years with a recent revenue decline of about 14% in 2024 compared to 2023. The gross profit margin is strong around 74%, but the company faces significant challenges with net profitability as evident by the net income loss in 2024. The EBIT and EBITDA margins remain moderate, indicating some operational efficiency but not enough to overcome the net losses.45
Neutral
Balance Sheet
The company's balance sheet reflects a high debt-to-equity ratio of approximately 1.42 in 2024, signaling heavy reliance on debt. The equity ratio is moderate at 27.8%, which indicates a balanced asset funding structure mostly through liabilities. The declining stockholders' equity over the years poses a risk to financial stability.50
Neutral
Cash Flow
Cash flow analysis reveals a decreasing trend in free cash flow, with a significant free cash flow deficit in 2024. The operating cash flow remains positive but is insufficient to cover capital expenditures. The ratios of operating and free cash flow to net income are not ideal, highlighting the company's ongoing cash management challenges.40
Negative
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 2.32B | 2.70B | 2.77B | 2.29B | 1.68B | Gross Profit |
| 1.73B | 1.06B | 1.90B | 1.57B | 1.28B | EBIT |
| 446.09M | 467.29M | 621.52M | 419.25M | 384.09M | EBITDA |
| 1.04B | 732.98M | 1.08B | 758.75M | 655.26M | Net Income Common Stockholders |
| -1.38B | 28.67M | -308.15M | 185.66M | 782.46M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 34.84M | 56.14M | 57.62M | 125.16M | 101.61M | Total Assets |
| 16.96B | 18.37B | 17.63B | 16.79B | 13.22B | Total Debt |
| 6.70B | 8.52B | 7.51B | 6.21B | 4.54B | Net Debt |
| 6.66B | 8.46B | 7.45B | 6.09B | 4.44B | Total Liabilities |
| 10.78B | 11.43B | 10.47B | 9.08B | 7.23B | Stockholders Equity |
| 4.71B | 5.04B | 5.22B | 5.86B | 5.20B |
| Cash Flow | Free Cash Flow | |||
| -390.70M | -398.14M | -469.93M | -1.19B | -280.81M | Operating Cash Flow |
| 481.72M | 628.03M | 619.10M | 157.47M | 505.22M | Investing Cash Flow |
| 132.74M | -1.10B | -1.79B | -1.80B | -1.23B | Financing Cash Flow |
| -556.41M | 442.81M | 1.11B | 1.67B | 766.86M |
Algonquin Power & Utilities Technical Analysis
Positive
7.22
Price Trends
6.93
Positive
6.64
Positive
6.91
Positive
Market Momentum
0.02
Positive
55.27
Neutral
70.42
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:AQN, the sentiment is Positive. The current price of 7.22 is above the 20-day moving average (MA) of 7.15, above the 50-day MA of 6.93, and above the 200-day MA of 6.91, indicating a bullish trend. The MACD of 0.02 indicates Positive momentum. The RSI at 55.27 is Neutral, neither overbought nor oversold. The STOCH value of 70.42 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for TSE:AQN.
Algonquin Power & Utilities Peers Comparison
Overall Rating
UnderperformOutperform
Sector (63)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
76 Outperform | $4.81B | 17.84 | 6.48% | 6.47% | 5.08% | ― | |
73 Outperform | $33.00B | 20.29 | 7.47% | 3.65% | -0.08% | 4.76% | |
70 Neutral | C$7.46B | 24.50 | 6.93% | 4.99% | -1.42% | -36.31% | |
69 Neutral | $17.67B | 34.73 | 4.50% | 4.84% | 7.16% | -52.28% | |
63 Neutral | $9.19B | 11.97 | 6.86% | 4.40% | 4.23% | -11.24% | |
51 Neutral | C$5.54B | ― | 1.65% | 5.86% | -6.72% | -6766.85% | |
44 Neutral | $19.80B | ― | -4.87% | 6.65% | 22.01% | -183.73% |
* Utilities Sector Average
Performance Comparison
TSE:AQN
Algonquin Power & Utilities
7.30
-0.19
-2.59%
TSE:FTS
Fortis
66.07
16.28
32.69%
TSE:BEP.UN
Brookfield Renewable Partners
29.14
2.81
10.67%
TSE:NPI
Northland Power
18.38
-1.47
-7.39%
TSE:EMA
Emera
60.34
16.55
37.80%
TSE:CU
Canadian Utilities A
37.08
9.12
32.62%
Algonquin Power & Utilities Earnings Call Summary
Earnings Call Date: Mar 7, 2025 | % Change Since: 7.07% | Next Earnings Date: May 9, 2025
Earnings Call Sentiment Neutral
The earnings call reflects a mixed sentiment with significant strategic achievements such as leadership transition and regulatory progress. However, these positives are offset by financial underperformance, operational challenges, and regulatory delays impacting the overall outlook.Highlights
Successful Leadership Transition
Roderick West was introduced as the Incoming CEO, bringing over 25 years of experience with Entergy. His leadership is expected to drive Algonquin towards new growth as a pure-play regulated utility.
Major Strategic Milestones Achieved
Completion of the sale of the renewables business and stake in Atlantica, leading to significant proceeds used to reduce debt and marking a transition to a pure-play regulated utility.
Regulatory Progress
Several rate cases were successfully settled and new rates implemented in Missouri, Arkansas, and New Brunswick, providing a positive outlook for regulatory improvements.
Transmission Investment Opportunities
Southwest Power Pool's plan approval includes projects in the Empire Electric footprint, potentially leading to over $700 million in capital spending in the next five to seven years.
Lowlights
Disappointing Financial Performance
Q4 adjusted net earnings were $45.2 million, down from $81.3 million in 2023, with a decline in adjusted net earnings per share from $0.12 to $0.06.
Missouri Rate Case Delay
The Empire Electric Missouri rate case was delayed due to a late revision in tariff calculations, pushing resolution to 2026 and involving a commission investigation into customer service issues.
Higher Operating Expenses
Operating expenses were higher due to non-recurring costs, increased depreciation, and interest expenses, impacting the overall financial results.
ROE Underperformance
Algonquin's earned ROE is several hundred basis points below the allowable target of 9.2%, highlighting the need for improvements in operational efficiency and regulatory lag reduction.
Company Guidance
During the Algonquin Power & Utilities Corp Fourth Quarter and Year End 2024 Earnings Conference Call, several key metrics and guidance points were highlighted. The company reported a consolidated adjusted EBITDA of $248.6 million for Q4, reflecting a 5.2% decline year-over-year, while full-year consolidated adjusted EBITDA increased by 2.6% to approximately $1.04 billion. Regulated adjusted EBITDA for Q4 was $234.4 million, a 2.4% increase from the previous year, and for the full year, it was $940.2 million, up 4.2%. The company's adjusted net earnings for Q4 were $45.2 million, down from $81.3 million the previous year, with full-year adjusted net earnings at $232.1 million, compared to $279.4 million in 2023. Adjusted net earnings per share for the full year were $0.30, down from $0.39 in 2023. Algonquin's year-end balance sheet showed a total GAAP debt of $8.05 billion, which is expected to be reduced following the $2.1 billion proceeds from the sale of its renewables business. The company's year-end 2024 estimated rate base was approximately $7.8 billion, an increase from $7.2 billion the previous year. The call also discussed the leadership transition, with Rod West taking over as CEO, and the strategic focus on improving customer service, operational efficiency, and closing the gap between the authorized and earned ROE, which currently stands in the mid-5% range against an authorized rate of 9.2%. Additionally, the company plans to provide more detailed guidance and an outlook within the next 90 days.Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.