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Algonquin Power & Utilities (TSE:AQN)
TSX:AQN
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Algonquin Power & Utilities
(TSX:AQN)
Rating:56Neutral
Price Target:
C$9.00
▲(15.24%Upside)
Positive Factors
Earnings Potential
Management outlines an ambitious EPS growth path, which suggests strong future earnings potential.
Leadership Impact
The new CEO is viewed positively and the transition to a pure-play utility with an improved balance sheet and transparency is seen as beneficial.
Negative Factors
Guidance Disappointment
AQN did not unveil its formal 2025 guidance with Q4/24 results as previously messaged, which disappointed the market.
Market Rating
The rating on AQN is lowered to Market Perform from Outperform despite strong initial results.
Algonquin Power & Utilities (AQN) vs. iShares MSCI Canada ETF (EWC)
Market Cap
$6.00B
Dividend Yield4.59%
Average Volume (3M)2.05M
Price to Earnings (P/E)―
Beta (1Y)1.29
Revenue Growth-4.74%
EPS Growth-213.24%
CountryCA
Employees3,786
SectorUtilities
Sector Strength74
IndustryRenewable Utilities
Share Statistics
EPS (TTM)0.13
Shares Outstanding767,830,260
10 Day Avg. Volume1,620,388
30 Day Avg. Volume2,049,391
Financial Highlights & Ratios
PEG Ratio<0.01
Price to Book (P/B)0.69
Price to Sales (P/S)0.00
P/FCF Ratio-8.30
Enterprise Value/Market Cap1.65
Enterprise Value/Revenue0.98
Enterprise Value/Gross Profit5.36
Enterprise Value/Ebitda2.93
Forecast
1Y Price Target
$8.50Price Target Upside8.78% Upside
Rating ConsensusHold
Number of Analyst Covering10
Algonquin Power & Utilities Business Overview & Revenue Model
Company DescriptionAlgonquin Power & Utilities Corp. (AQN) is a diversified international generation, transmission, and distribution utility company based in North America. The company operates through two primary business segments: Regulated Services and Renewable Energy. AQN is involved in the generation of clean energy through its portfolio of wind, solar, and hydroelectric power facilities. Additionally, it provides essential utility services, including electricity, natural gas, and water distribution to its customers across various regions.
How the Company Makes MoneyAlgonquin Power & Utilities Corp. generates revenue primarily through its two business segments. The Regulated Services segment earns income by providing utility services, including electricity, natural gas, and water distribution, to residential, commercial, and industrial customers. These services are typically provided under regulated rate structures, ensuring a stable and predictable revenue stream. The Renewable Energy segment contributes to revenue by generating and selling electricity from its portfolio of renewable energy facilities, such as wind, solar, and hydroelectric power plants. The company often enters into long-term power purchase agreements (PPAs) with utilities and other entities, securing a consistent income from energy sales. Additionally, strategic acquisitions and partnerships help AQN expand its market presence and enhance its ability to generate sustainable revenue growth.
Algonquin Power & Utilities Earnings Call Summary
Earnings Call Date:May 09, 2025
(Q1-2025)
| % Change Since: 3.81%|
Next Earnings Date:Aug 08, 2025
Earnings Call Sentiment Neutral
The earnings call reflected a mix of positive financial performance with significant increases in net earnings and strategic investments in transmission projects. However, these are tempered by ongoing investigations into customer service issues and a recent tragic incident in Missouri.Q1-2025 Updates
Positive Updates
Significant Increase in Adjusted Net Earnings
First quarter adjusted net earnings from continuing operations were $111.6 million, up 39% from $80.1 million in 2024.
Empire District Electric Transmission Projects
Southwest Power Pool approved a $7.7 billion Integrated Transmission Plan, with $750-$800 million dedicated to Empire District Electric service area upgrades.
Regulatory Approvals and Rate Increases
New Hampshire Public Utilities Commission approved the Granite State Electric settlement agreement with new rates effective April 1.
Negative Updates
Incident in Lexington, Missouri
A tragic incident occurred on April 9 in the gas service territory, prompting an ongoing investigation.
Billing and Customer Service Challenges
Ongoing investigations and audits in Missouri, Arkansas, and New Hampshire related to customer service and billing issues.
Removal of Atlantica Dividends Impact
A decrease in adjusted net earnings by $22.7 million due to the removal of Atlantica dividends.
Company Guidance
During the Algonquin Power & Utilities Corporation First Quarter 2025 Earnings Conference Call, guidance was provided on several key financial metrics and operational updates. The company reported a 39% increase in first-quarter adjusted net earnings from continuing operations, reaching $111.6 million, compared to $80.1 million in the prior year. The Regulated Services Group saw a 43% increase in net earnings, driven by new rates contributing $15.7 million and a reduction in interest expenses of $13.6 million. The Hydro Group's net earnings increased by $13.4 million due to a one-time tax recovery. Adjusted net earnings per share (EPS) were $0.14, maintaining the level from the previous year's first quarter, despite a $0.03 negative impact from the renewables sale. The company also highlighted healthy credit metrics, with S&P indicating an FFO to debt ratio of 12.5% and Fitch reporting a debt-to-EBITDA ratio of 5.6x. Looking ahead, Algonquin plans to provide an updated outlook for 2025-2027 on June 3, including projected adjusted net EPS ranges and further strategic insights following CEO Rod West's first 90 days in the role.Algonquin Power & Utilities Financial Statement Overview
Summary
Algonquin Power & Utilities is facing significant financial headwinds, with ongoing net losses impacting profitability and returns on equity. While operational efficiency is evident through reasonable EBIT and EBITDA margins, the high debt levels and negative cash flows could pose risks. The company must focus on improving revenue growth and managing debt to enhance financial stability and shareholder value.Income Statement
The income statement shows a mixed performance. The gross profit margin for TTM (Trailing-Twelve-Months) is strong at 75.43%, but the company is grappling with significant net losses, as evidenced by a negative net profit margin of -48.77% for TTM. Revenue has declined from previous years, indicating challenges in maintaining growth. The EBIT and EBITDA margins are reasonable, at 19.51% and 39.23% respectively for TTM, suggesting operational efficiency amidst financial pressures.55
Neutral
Balance Sheet
The balance sheet reflects a moderate level of financial stability. The debt-to-equity ratio is 1.35 for TTM, indicating moderate leverage, which is common in the utilities sector. The return on equity (ROE) is concerning at -25.45% for TTM, reflecting the impact of net losses on shareholders' returns. However, the equity ratio is healthy at 34.36% for TTM, indicating a decent cushion of equity to cover assets and liabilities.60
Neutral
Cash Flow
The cash flow statement reveals challenges in cash management. The operating cash flow to net income ratio is negative due to net losses, and free cash flow remains negative for TTM at -457.60 million. While operating cash flow is positive at 424.87 million, the negative free cash flow highlights substantial capital expenditures, which require careful management to avoid liquidity issues.45
Neutral
| Breakdown | TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 2.45B | 2.32B | 2.70B | 2.77B | 2.27B | 1.68B |
| Gross Profit | 1.85B | 1.73B | 1.06B | 1.90B | 1.56B | 1.28B |
| EBITDA | 960.99M | 1.04B | 732.98M | 1.08B | 772.86M | 655.26M |
| Net Income | -1.19B | -1.38B | 28.67M | -308.15M | 264.86M | 782.46M |
Balance Sheet | ||||||
| Total Assets | 13.66B | 16.96B | 18.37B | 17.63B | 16.79B | 13.22B |
| Cash, Cash Equivalents and Short-Term Investments | 72.20M | 34.84M | 56.14M | 57.62M | 125.16M | 101.61M |
| Total Debt | 6.32B | 6.70B | 8.52B | 7.51B | 6.21B | 4.54B |
| Total Liabilities | 8.51B | 10.78B | 11.43B | 10.47B | 9.08B | 7.23B |
| Stockholders Equity | 4.69B | 4.71B | 5.04B | 5.22B | 5.86B | 5.20B |
Cash Flow | ||||||
| Free Cash Flow | -457.60M | -390.70M | -398.14M | -469.93M | -1.19B | -280.81M |
| Operating Cash Flow | 424.87M | 481.72M | 628.03M | 619.10M | 157.47M | 505.22M |
| Investing Cash Flow | 2.08B | 132.74M | -1.10B | -1.79B | -1.80B | -1.23B |
| Financing Cash Flow | -2.52B | -556.41M | 442.81M | 1.11B | 1.67B | 766.86M |
Algonquin Power & Utilities Technical Analysis
Positive
7.81
Price Trends
7.69
Positive
7.34
Positive
6.90
Positive
Market Momentum
0.04
Positive
54.16
Neutral
65.50
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 7.81 is below the 20-day moving average (MA) of 7.81, above the 50-day MA of 7.69, and above the 200-day MA of 6.90, indicating a bullish trend. The MACD of 0.04 indicates Positive momentum. The RSI at 54.16 is Neutral, neither overbought nor oversold. The STOCH value of 65.50 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 (67)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
73 Outperform | $5.94B | 22.79 | 6.08% | 5.29% | -5.33% | ― | |
70 Neutral | C$255.54M | 59.81 | -4.70% | 6.92% | -1.45% | -210.16% | |
67 Neutral | $16.50B | 17.05 | 4.45% | 3.57% | 4.76% | 6.13% | |
67 Neutral | C$2.79B | 69.91 | 4.20% | 2.62% | 0.97% | ― | |
59 Neutral | C$3.35B | 304.49 | 0.67% | 2.02% | -16.63% | -87.78% | |
56 Neutral | $6.00B | ― | 5.54% | 4.59% | -4.74% | -213.24% | |
55 Neutral | $23.99B | ― | -5.97% | 5.66% | 22.01% | -183.73% |
* Utilities Sector Average
Performance Comparison
TSE:AQN
Algonquin Power & Utilities
7.86
0.08
0.98%
TSE:BEP.UN
Brookfield Renewable Partners
35.45
2.75
8.40%
TSE:NPI
Northland Power
22.57
0.13
0.56%
TSE:BLX
Boralex Inc Cl A
31.59
-1.94
-5.79%
TSE:PIF
Polaris Infrastructure
12.03
0.12
1.01%
TSE:INE
Innergex Renewable Energy
13.73
3.67
36.48%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
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.