Algonquin Power & Utilities (AQN) reported double-digit revenue and adjusted earnings growth in its third quarter of 2021.
Revenues & Earnings
Revenues for Q3 2021 came in at $528.6 million, an increase of 40% from revenues of $376.5 million reported in Q3 2020. (See Analysts’ Top Stocks on TipRanks)
The company reported a net loss attributable to shareholders of $27.9 million ($0.05 per share) in the quarter ended September 30, compared to a profit of $55.9 million ($0.09 per share) a year ago. Adjusted EBITDA increased 27%, from $197.9 million to $252 million.
On an adjusted basis, Algonquin earned $97.6 million ($0.15 per share) for its most recent quarter compared with an adjusted profit of $88.1 million ($0.15 per share) in the prior-year quarter.
Kentucky Power Acquisition
AQN President and CEO Arun Banskota said, “We are pleased to report solid earnings in the third quarter, underpinning AQN’s diversified and resilient business model. We are excited about our recently announced agreement to acquire Kentucky Power Company and AEP Kentucky Transmission Company, Inc. This acquisition is expected to be a continuation of AQN’s disciplined growth strategy, adding to our U.S. regulated footprint, and offers an opportunity for the Company to utilize its proven “greening the fleet” capabilities, aligning with our commitment to advancing a sustainable energy and water future.”
For the nine-month period ended September 30, 2021, capital expenditures totaled $3.4 billion. The company’s investment plan of $4 billion for 2021 remains on track. The acquisition of Kentucky Power and Kentucky TransCo will be additive to Algonquin’s long-term investment portfolio.
Wall Street’s Take
On November 10, BMO Capital analyst Benjamin Pham upgraded AQN to Buy from Hold with an unchanged C$17 price target. This implies 4.3% downside potential.
Pham raised his price target following Algonquin’s acquisition of Kentucky Power and associated equity offering of $650 million. The analyst stated that while there are transaction and integration risks, Algonquin has a proven track record in acquiring and integrating U.S. utilities. He sees an “attractive” potential total return of 24% in the stock.
Overall, AQN scores a Moderate Buy consensus rating among analysts based on two Buys and two Holds. The average Algonquin Power & Utilities price target of C$18.95 implies 6.6% upside potential to current levels.