Algonquin Power & Utilities Faces Challenging Future That May Limit Returns

Summary:

  • Algonquin Power & Utilities owns and operates various regulated and non-regulated power assets, including utilities for generation, distribution, and transmission.
  • The company plans to improve its business by reducing costs, maintaining its credit rating, minimizing the need for new equity financing, and focusing on organic growth.
  • AQN will reduce its dividend by 40% and suspend its DRIP program, sell assets worth $1 billion, and pursue the acquisition of Kentucky Power.
  • My target value is $8 per share, based on a DCF model using a cost of capital of 6.4%. I would stay away till more news on Kentucky Power and the divestitures.

Confident male engineer using a laptop in front of electric power station

SimonSkafar

Algonquin Power & Utilities Corp. (NYSE:AQN) (TSX:AQN:CA) owns and operates a range of regulated and non-regulated power assets, including generation, distribution, and transmission utilities. On January 12, AQN provided an investor update where they presented

AQN financial outlook

Company presentation

AQN dividend cut

Company presentation

AQN KP update

Company presentation

AQN credit rating

Company presentation

AQN fund growth

Company presentation

AQN historical returns

Company filings

AQN historical price to book

Ycharts


Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.


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