I do not own this stock of Algonquin Power & Utilities Corp (TSX-AQN, NTSE-AQN). This is a dividend paying utility stocks. I got it off a list of Dividend Paying utility stocks. Also, I own Emera Inc. and this company owns shares in Algonquin Power.
When I was updating my spreadsheet, I noticed Outstanding Shares have increased a lot over the years. The increase over the past 5 and 10 years is 19% and 20% per year. In this event, the growth in per share values is important. Note that Revenue has increased by 21% and 25% over the past 5 and 10 years, but revenue per Share is up at 1.8% and 4% per year over the same time periods.
This company used to be an Income Trust. Income Trust companies used to pay much higher dividends and therefore had higher yields than corporations. Around that time, they not only cut the dividends, but they changed the frequency from monthly to quarterly. They have been increasing the dividends most years since 2011. Then in 2014, they changed the currency of the dividend to US$. Growth is in US$ and is it at 9.88% per year.
The current yield is moderate, but when the company was an income trust, the yield was much higher. The current yield is 4.63%. The 5, 10 and historical yields are 4.77^%, 4.70% and 4.89%.
The Dividend Payout Ratios are too high. If you look at the DPR for EPS for 2018 they are 129% with 5 year coverage at 123%. However, the company is running a Dividend Reinvestment Plan, so dividends are payable in other shares as well as cash. If you look at dividends paid in cash, 2018 is the first year the payout was less than 100%. In 2018 the Dividend Payout Ratio for cash dividends is 94% with 5 year coverage at 107%. The DPR for Cash Flow is only good if you look at cash dividends and then the ratio is 31%with 5 year coverage at 38%.
Debt Ratios are fine. The Long Term Debt/Market Cap ratios is fine at a current 0.68. The Liquidity Ratio is too low and has been too low as it is under 1.00. This means that the current assets cannot cover the current liabilities. However, if you add in cash flow after dividends it is better at a current 1.60 but has been lower in the past with a 5 year median of just 1.21. This is typical for a utility company as they count on cash flow to pay current debt, but it is a vulnerability.
The Debt Ratio is good at 1.75 with 5 year median also at 1.75. The Leverage and Debt/Equity Ratios are high, but rather typical of a utility at 3.14 and 1.68 respectively. The Debt/Equity Ratios are better than the Leverage Ratio but this is because of a large part of the Book Value is allocated to NCI.
The Total Return per year is shown below for years of 5 to 21 to the end of 2018 CDN$. Under the Capital Gain column is the portion of the Total Return attributable to capital gains. Under the Dividend column is the portion of the Total Return attributable to dividends. See chart below.
|From||Years||Div. Gth||Tot Ret||Cap Gain||Div.|
The Total Return per year is shown below for years of 5 to 15 to the end of 2018 US$. Under the Capital Gain column is the portion of the Total Return attributable to capital gains. Under the Dividend column is the portion of the Total Return attributable to dividends. See chart below.
|From||Years||Div. Gth||Tot Ret||Cap Gain||Div.|
The 5 year low, median, and high median Price/Earnings per Share Ratios are 23.61, 25.93 and 28.25. The corresponding 10 year ratios are 23.61, 26.55 and 29.39. The corresponding historical ratios are 23.75. 27.16 and 27.16. The current P/E Ratio is 19.35 based on a current stock price of $16.32 and 2019 EPS estimate of $0.84 ($0.63 US$). This stock price testing suggests that the stock price is relatively cheap. This is all in CDN$.
I get a Graham Price of $12.54. The 10 year low, median, and high median Price/Graham Price Ratios are 1.24, 1.40 and 1.58. The current P/GP Ratio is 1.30 based on a stock price of $16.32. This stock price testing suggests that the stock price is relatively reasonable and below the median. This is all in CDN$.
I get a 10 year median Price/Book Value per Share Ratio of 1.55. The current P/B Ratio is 1.97 based on Book Value of $4,075M, Book Value per Share of $8.29 and a stock price of $16.32. The current P/B Ratio is some 27% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive. This is all in CDN$.
The 10 year median Price/Sales (Revenue) Ratio is 2.62. The current P/S Ratio is 2.47 based on 2019 Revenue estimate of $2,312M ($1,727 US$), Revenue per Share of $4.71 and a stock price of $16.32. The current ratio is some 32% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive. This is all in CDN$.
Results of stock price testing is, I believe, that the stock price is relatively expensive. This is because of the P/S Ratio testing (which should not be ignored) and the P/B Ratio testing. I find that the P/E Ratios are rather high for a utility stock. Note that the Dividend Yield test would not be a good one because this stock used to be an Income Trust.
When I look at analysts’ recommendations, I find Strong Buy (2), Buy (6) and Hold (6). The consensus would be a Buy. The 12 month stock price is $16.20 ($12.10 US$). This implies a total return of 3.86% with 4.63% from dividends and capital loss of 0.76%. In a way, the 12 month stock price consensus really says the stock is too high at present. That is how I interpret a 12 month stock price lower than current price.
See what analysts are saying at Stock Chase. This company is a long-term play on clean energy. Nelson Smith on Motley Fool likes this company and says it is poised to be solid long-term investments . A writer on Simply Wall Street says the company has outperformed its industry. Vishesh Raisinghani of Motley Fool via Yahoo Finance thinks you can bank on this clean energy company for a great future. This article on Renewables Now talks about a recent acquisition.
Algonquin Power & Utilities Corp is a North American generation, transmission, and distribution utility. Within its distribution group, Algonquin owns and operates regulated water, natural gas, and electricity distribution utilities in the United States. In its generation group, Algonquin sells electricity produced by its energy facilities, including hydroelectric, wind, solar, and thermal power plants. Finally, the company's transmission group focuses on building and investing in natural gas pipelines and electric transmission systems. Its web site is here Algonquin Power & Utilities Corp.
The last stock I wrote about was about was be Intertape Polymer Group Inc. (TSX-ITP, OTC-ITPOF) ... learn more. The next stock I will write about will be CI Financial Corp (TSX-CIX, OTC-CIFAF) ... learn more on Monday, June 24, 2019 around 5 pm.
This blog is meant for educational purposes only and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.
See my website for stocks followed and investment notes. I have three blogs. The first talks only about specific stocks and is called Investment Talk. The second one contains information on mostly investing and is called Investing Economics Mostly. My last blog is for my book reviews and it is called Non-Fiction Mostly. Follow me on Twitter or StockTwits. I am on Instagram. Or you can just Google #walktoronto spbrunner8166 to see my pictures.