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Algonquin Power & Utilities (TSE:AQN)
TSX:AQN
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Algonquin Power & Utilities
(TSX:AQN)
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Rating:50Neutral
Price Target:
C$8.00
▼(-1.36% Downside)
Algonquin Power & Utilities faces significant financial challenges, including declining revenues and high leverage, which weigh heavily on its overall score. Technical analysis shows mixed signals, with short-term bullishness but potential longer-term risks. Valuation metrics are hindered by negative earnings, though the dividend yield offers some investor appeal. The earnings call provided a balanced outlook, but financial performance remains the most significant factor impacting the score.
Positive Factors
Regulatory Achievements
Regulatory achievements like the approved rate adjustment enhance revenue stability and reflect effective regulatory engagement, supporting long-term financial health.
Management Strengthening
Strengthening management with experienced leaders can drive operational excellence and improve stakeholder relations, positively impacting long-term strategic execution.
Strategic Financial Outlook
A clear strategic financial outlook with no need for common equity financings through 2027 indicates strong capital management and focus on sustainable growth.
Negative Factors
Declining Revenue
A declining revenue trend can hinder growth and profitability, posing challenges to maintaining competitive market positioning and financial stability.
High Leverage
High leverage increases financial risk and limits flexibility, potentially impacting the company's ability to invest in growth opportunities and weather economic downturns.
Negative Cash Flow Growth
Negative cash flow growth suggests liquidity challenges, which can constrain operational capabilities and necessitate improved cash management for long-term viability.
Algonquin Power & Utilities (AQN) vs. iShares MSCI Canada ETF (EWC)
Market Cap
$6.23B
Dividend Yield4.51%
Average Volume (3M)2.50M
Price to Earnings (P/E)―
Beta (1Y)1.12
Revenue Growth-6.96%
EPS Growth-1235.30%
CountryCA
Employees3,786
SectorUtilities
Sector Strength65
IndustryRenewable Utilities
Share Statistics
EPS (TTM)0.06
Shares Outstanding768,025,000
10 Day Avg. Volume2,196,239
30 Day Avg. Volume2,495,881
Financial Highlights & Ratios
PEG Ratio<0.01
Price to Book (P/B)0.69
Price to Sales (P/S)1.40
P/FCF Ratio-8.30
Enterprise Value/Market Cap2.48
Enterprise Value/Revenue6.49
Enterprise Value/Gross Profit17.42
Enterprise Value/Ebitda19.08
Forecast
1Y Price Target
$8.75Price Target Upside7.84% Upside
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 generates revenue primarily through the sale of electricity and utility services. The company has a diversified revenue model with key revenue streams including long-term power purchase agreements (PPAs) for its renewable energy projects, which provide stable and predictable cash flows. Additionally, regulated utility operations contribute significantly to earnings, as these services typically involve fixed rates set by regulatory bodies, ensuring a steady income stream. AQN also benefits from strategic partnerships and investments in renewable projects, which enhance its market presence and operational capacity. Factors contributing to its earnings include favorable regulatory environments, increasing demand for renewable energy, and a growing focus on sustainability among consumers and businesses.
Algonquin Power & Utilities Earnings Call Summary
Earnings Call Date:Aug 08, 2025
(Q2-2025)
| % Change Since: |
Next Earnings Date:Nov 07, 2025
Earnings Call Sentiment Neutral
The earnings call presented a balanced view with both positive and negative aspects. The company reported regulatory achievements and strategic strengthening of the management team, alongside a solid financial outlook. However, these were offset by a decline in adjusted net earnings and EPS compared to the previous year.Q2-2025 Updates
Positive Updates
Regulatory Progress
Notable rate case filings during the quarter with a total combined rate adjustment request of $73.6 million. Settlement agreement approved by the Arizona Corporation Commission resulting in a $4.2 million revenue adjustment.
Executive Management Strengthening
Appointments of Noel Black as Chief Regulatory and External Affairs Officer and Amy Walt as Chief Customer Officer, signaling a commitment to operational excellence and stakeholder engagement.
Financial Outlook and Strategy
Company announced a 3-year financial outlook and Back to Basics customer-centric plan, projecting improvements in earned ROE, operating expenses as a percent of revenues, and capital investment deployment, with no common equity financings needed through 2027.
Negative Updates
Decrease in Adjusted Net Earnings
Second quarter adjusted net earnings from continuing operations were $36.2 million, down approximately 13% from $41.5 million in 2024.
EPS Decline
Q2 adjusted net earnings per share were $0.04, down from $0.06 in Q2 2024, influenced by the elimination of Atlantica dividends, share dilution, higher depreciation taxes, and lower income from wind production.
Company Guidance
During the second quarter 2025 earnings call for Algonquin Power & Utilities Corp., the company provided guidance indicating solid financial results and a strong outlook for the year. They reported adjusted net earnings from continuing operations of $36.2 million, a decrease of approximately 13% from the previous year's $41.5 million. The adjusted net earnings per share were $0.04, down from $0.06 in the previous year. Notable financial projections include an estimated adjusted net EPS outlook for 2025 through 2027, expected improvements to earned ROE, and operating expenses as a percent of revenues. The company anticipates maintaining its BBB investment-grade credit rating and does not foresee the need for common equity financings through 2027. Moreover, a total combined rate adjustment request of $73.6 million was filed during the quarter. The Arizona Corporation Commission approved a $4.2 million revenue adjustment, with new rates effective July 1. The company continues to focus on strategic investments to improve customer experience, drive operational efficiencies, and achieve regulatory outcomes, all while aiming to become a premium pure-play regulated utility.Algonquin Power & Utilities Financial Statement Overview
Summary
Algonquin Power & Utilities is facing financial challenges with declining revenues, significant net losses, and high leverage. While gross profit margins are strong, the company struggles with profitability and cash flow management. The high debt levels pose a risk to financial stability, and the negative return on equity indicates poor shareholder returns.Income Statement
The income statement shows a declining revenue trend with a negative revenue growth rate of -2.89% in the TTM. The company is experiencing significant net losses, with a net profit margin of -57.66% in the TTM. Gross profit margin remains relatively strong at 74.06%, but the negative net income is a concern. EBIT and EBITDA margins are moderate, indicating some operational efficiency, but overall profitability is weak.45
Neutral
Balance Sheet
The balance sheet reveals a high debt-to-equity ratio of 1.35 in the TTM, indicating significant leverage. Return on equity is negative, reflecting the company's inability to generate positive returns for shareholders. The equity ratio is not explicitly calculated, but the high leverage suggests potential financial risk. Overall, the balance sheet shows financial instability due to high debt levels.50
Neutral
Cash Flow
Cash flow analysis indicates negative free cash flow growth of -7.04% in the TTM, with free cash flow to net income ratio also negative. Operating cash flow is positive but insufficient to cover net losses, as reflected in the operating cash flow to net income ratio of 0.47. The cash flow situation highlights liquidity challenges and the need for improved cash management.40
Negative
| Breakdown | TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 2.38B | 2.32B | 2.40B | 2.77B | 2.27B | 1.68B |
| Gross Profit | 885.96M | 845.26M | 836.51M | 1.05B | 858.10M | 759.16M |
| EBITDA | 808.96M | 831.16M | 816.62M | 955.99M | 758.75M | 655.26M |
| Net Income | -1.37B | -1.38B | 28.67M | -211.99M | 264.86M | 782.46M |
Balance Sheet | ||||||
| Total Assets | 13.69B | 16.96B | 18.37B | 17.63B | 16.80B | 13.22B |
| Cash, Cash Equivalents and Short-Term Investments | 54.30M | 34.84M | 25.05M | 57.62M | 125.16M | 101.61M |
| Total Debt | 6.34B | 6.73B | 7.51B | 7.53B | 6.25B | 4.60B |
| Total Liabilities | 8.57B | 10.78B | 11.43B | 10.47B | 9.10B | 7.23B |
| Stockholders Equity | 4.68B | 4.71B | 5.04B | 5.22B | 5.86B | 5.20B |
Cash Flow | ||||||
| Free Cash Flow | -409.51M | -371.94M | -404.59M | -455.94M | -1.17B | -295.05M |
| Operating Cash Flow | 449.20M | 458.59M | 638.22M | 600.67M | 154.82M | 530.84M |
| Investing Cash Flow | 2.06B | 176.05M | -1.00B | -1.47B | -656.52M | -1.28B |
| Financing Cash Flow | -2.57B | -579.38M | 340.20M | 808.32M | 534.21M | 798.30M |
Algonquin Power & Utilities Technical Analysis
Positive
8.11
Price Trends
7.80
Positive
7.79
Positive
7.26
Positive
Market Momentum
0.12
Negative
68.54
Neutral
85.49
Negative
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 8.11 is above the 20-day moving average (MA) of 7.71, above the 50-day MA of 7.80, and above the 200-day MA of 7.26, indicating a bullish trend. The MACD of 0.12 indicates Negative momentum. The RSI at 68.54 is Neutral, neither overbought nor oversold. The STOCH value of 85.49 is Negative, 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
UnderperformOutperform
Sector (66)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
72 Outperform | ― | ― | ― | ― | 0.97% | ― | |
66 Neutral | $17.65B | 18.10 | 5.60% | 3.62% | 6.62% | 11.55% | |
62 Neutral | C$6.50B | 22.11 | -1.19% | 4.98% | -8.39% | -180.67% | |
61 Neutral | C$288.37M | 59.81 | -4.34% | 6.10% | 4.98% | -244.98% | |
54 Neutral | C$2.85B | 271.12 | -0.61% | 2.38% | -13.45% | -112.19% | |
52 Neutral | $24.47B | ― | -5.97% | 5.54% | 20.05% | -54.69% | |
50 Neutral | $6.23B | ― | 1.50% | 4.51% | -6.96% | -1235.30% |
* Utilities Sector Average
TSE:AQN
Algonquin Power & Utilities
8.11
1.43
21.39%
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44.94%
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13.73
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19.29%
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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.