Algonquin Power & Utilities Corp (AQN-T)

There's little more upside short-term. No one liked the Kentucky Power deal, so glad it died. There's not much downside here, but there's also not much to entice him to buy it. Boralex and Northland Power, in contrast, offer better growth and balance sheets.

She sold. Dividend cut by 40%. Kentucky Power deal collapse took away that growth opportunity. Reassessing renewable power strategy. Selling assets squashes growth. She'd bought it as an income stock with earnings ability to increase dividend annually, but balance sheet still quite stretched.

They ran into trouble recently by proposing to buy Kentucky Power, but the deal just died. AQN was smart to trim its dividend and they pledge to sell $1 billion of assets, which is the next thing to watch. How much will they receive? Pays a decent yield. The company is aware of its issues. Don't expect much growth here for a while. Collect the dividend and watch shares rise gradually. Ending the Kentucky deal was good; the balance sheet is better.

Likes a lot. Very out of favour and undervalued. Trades at less than 15x earnings, a discount to peers. Good news this week on Kentucky Power, as it gives them a lot more breathing room and doesn't force them into anything. More certainty they'll maintain investment-grade credit rating, not a distressed seller, can look for other assets in a depressed environment. He'd definitely own and buy today.

Caught off-guard with the market with their disappointing performance. Yesterday, they backed out of the Kentucky Power purchase, which is positive, because it gives AQN more time to execute their asset sales. Plan to sell $1 billion worth to fund capital program and pay down debt. The December sell-off was overdone, though is up around 30% YTD, so she sold some shares. Will be little growth, including dividends, in the next few years, but after Kentucky, AQN must sell some assets. She is on the sidelines, and AQN could be a source of funds for other names.

Looks like it'll walk away from Kentucky acquisition. This would significantly help balance sheet and increase cashflow flexibility, so they don't have to sell as many assets. Tough to buy right now, but hold if you own it.

Depends on what happens with Kentucky Power. Latest news is that they're backing away from the acquisition, a move that would really help their balance sheet. Valuation not bad at 13.4x. Models negative EPS growth. He's nibbled, but wouldn't add here. See his Top Picks.

AQN has had poor execution and much lower earnings than expected last year. 
High rates have not helped. 
It also cut its dividend which always makes us more cautious. 
This was after management more or less indicated the dividend was safe, so they lose a point for that too. 
We think it is OK for income. 
Debt is high, and growth is not huge. 
But the company took the painful step on the dividend, and investors' initial reaction was harsh, and it has slowly worked its way higher.  
We would consider it a HOLD. 
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A tough one. When AQN announced it was buying KP, the macro was very different. Now, interest rates are much higher. That said, finding a good fit like KP into AQN is rare and will ultimately benefit AQN, Yes, AQN carries too much debt, but so do other companies like Altagas. However, AQN can sell some assets above value given strong power demand in order to rectify that debt over time. For the whole space, electricity demand across North America has increased given stagnation for a long time. Such stocks are a long-term opportunity. AQN will muddle through this, though maybe longer than short-term investors want. He's sticking with it.

AQN is recovering and remains cheap. 
We think the shareholder base has turned over now (after the dividend cut) and we think it can be held for a couple of quarters to see if the turnaround takes hold.  
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Perhaps all those shareholders need to recover their losses, since AQN-T averages 4.5 shares a day compared to its peers. (Brookfield Renewable’s average daily volume is 218,372.) As a shareholder, I am holding on and still advise buying on dips for the long haul as you collect that divvy. AQN has righted its debt-laden ship, but it takes time to turn around a massive vessel in open waters. Read Budget winners for our full analysis. 

It dropped so quickly. The founder left a few years ago--maybe that was the signal. New managers came in and let their floating lending rate debt levels get out of hand as interest rates rise. This hampers growth. There are delays in their projects, which means higher taxes. However, they cut their dividend and righted their guidance. Overhang is this Kentucky Power takeover, with a April 26 deadline. (Regulators have twiced declined the deal.) If it happens, AQN will take on more debt to fund this. AQN has good assets and it trades at a discount to peers. They will not issue equity for the next few years, but sell some existing assets to finance growth.

Then, last Friday when markets were selling off yet again, AQN rallied 3% after issuing its latest report. Q4-2022 adjusted EPS came in at $0.22, which missed the street’s estimate of $0.27, while the full-year clocked in at $0.69 “near the top end of” their revised guidance. At least Q4 adjusted earnings rose 10% YOY while full-year gained 6%. Further, the company sold nearly $360 million of wind-power assets before 2022 ended to shore up the balance sheet. By the end of last September, about 22% of their debt consisted of that nasty variable rate stuff. By the end of 2022, about 89% of debt was fixed. Read Adobe and Algonquin Power: Out of the Penalty Box? for our full analysis.

Does not follow company.
Company underperforming.
Very tough business model to make returns. 
Not impressed with management team.
High debt with poor assets. 
Equity issuances not good for investors. 

Has sold shares the past year.
Under pressure since November 2022.
Company has difficulties with operations.
Dividend cut by 40% recently. 
Better names in the sector.
Waiting for management to get control of company.