Algonquin Power moves out of $13s for now
On November 8 Algonquin Power released it's third quarter report.Most categories showed small increases over Q3
of 2017 except for net earnings and adjusted funds from operations.Both of the latter categories increased by 21% over 2017.This blog has been critical of Algonquin because so much of total assets are locked into the American regulatory scene.I have suggested that they raise a secondary equity issue of their American subsidiary Liberty Utilities.These funds could be used to acquire assets that are not American and not regulated.Algonquin has started this process by acquiring a Spanish utility called Atlantica Yield(see my blog Workathon 24/09/2018 for details);it is gradually moving out from under the umbrella.This blog applauds this move and would like to see more of these purchases.It is still clear that the greatest percentage of earnings comes from this umbrella. But this has helped to move AQN into the $14 price range for the first time in a long time.
Third Quarter Financial Performance
Revenues and adjusted EBITDA went up only5% from 2017.While net earnings and adjusted funds from operations were ahead 22% from 2017.So it was a better than average quarter for AQN.But they looked a bit better on a 9 month basis;revenues were ahead by about 11% and adjusted EBITDA by about 22%.More importantly adjusted EBITDA is on track to hit $775 million for the year and adjusted funds from operations to hit $450 to $475 million.Furthermore adjusted e.p.s. should hit $.65 to $.75 for the year.
Steady as She Goes
AQN has been buying distressed American utilities for several years and many are under the regulated umbrella.There was a steady progression of these regulated utilities that produced a good rate of return.Then AQN acquired Liberty Utility which was a huge utility and needed quite a bit of renovating as well.Algonquin did gain some independence because of it's NYSE listing. But it seemed to be locked in to spending investment on Liberty and associated regulated utilities.This,in effect, stabilized revenues and earnings.It also kept AQN in the $12 and $13 price range in this mediocre market.
This blog has called repeatedly for AQN to raise equity from Liberty and buy,for example, a small Canadian utility.AQN has ignored this advice and instead bought a substantial Spanish utility and invested in several wind farms connected to Liberty Utility.This is the slow and steady way of moving out from under the American regulated umbrella.Or as they say "steady as she goes".However a pick-up in the market could easily see Algonquin Power move into the $14s. http://www.cppib.com/en/; https://www.otpp.com/home
Third Quarter Financial Performance
Revenues and adjusted EBITDA went up only5% from 2017.While net earnings and adjusted funds from operations were ahead 22% from 2017.So it was a better than average quarter for AQN.But they looked a bit better on a 9 month basis;revenues were ahead by about 11% and adjusted EBITDA by about 22%.More importantly adjusted EBITDA is on track to hit $775 million for the year and adjusted funds from operations to hit $450 to $475 million.Furthermore adjusted e.p.s. should hit $.65 to $.75 for the year.
Steady as She Goes
AQN has been buying distressed American utilities for several years and many are under the regulated umbrella.There was a steady progression of these regulated utilities that produced a good rate of return.Then AQN acquired Liberty Utility which was a huge utility and needed quite a bit of renovating as well.Algonquin did gain some independence because of it's NYSE listing. But it seemed to be locked in to spending investment on Liberty and associated regulated utilities.This,in effect, stabilized revenues and earnings.It also kept AQN in the $12 and $13 price range in this mediocre market.
This blog has called repeatedly for AQN to raise equity from Liberty and buy,for example, a small Canadian utility.AQN has ignored this advice and instead bought a substantial Spanish utility and invested in several wind farms connected to Liberty Utility.This is the slow and steady way of moving out from under the American regulated umbrella.Or as they say "steady as she goes".However a pick-up in the market could easily see Algonquin Power move into the $14s. http://www.cppib.com/en/; https://www.otpp.com/home
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