Is it a good company at a reasonable price? The stock price seems in a reasonable range. It is always good to diversify a portfolio with some utility stocks. Money Sense gives this stock a B rating.
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 both the CEO and CFO have increased their shares over the past years. However, both have started with this company within the last 2 years.
Shares have been increasing rapidly. Outstanding shares have increased by 20% and 15% per year over the past 5 and 10 years. Because of this, you can see a big difference in Revenue and Revenue per Share. Revenue has increased by 23% and 24% per year over the past 5 and 10 years, but Revenue per Share has only increased by 3% and 5% per year over the past 5 and 10 years.
If you had invested in this company in December 2011, $1001.52 you would have bought 156 shares at $6.42 per share. In December 2021, after 10 years you would have received $1,022.17 in dividends. The stock would be worth $2,850.12. Your total return would have been $3,872.29.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $6.42 | $1,001.52 | 156 | 10 | $1,022.17 | $2,850.12 | $3,872.29 |
The dividend yields are currently good with dividend growth moderate. Dividends are paid in US$ for this stock. The current dividend yield is good (5% to 6% ranges) at 5.21%. The 5 and 10 year median dividend yields are moderate (2% to 4% ranges) at 4.31% and 4.53%. The historical dividend yield is good at 6.44%. The growth is moderate (8% to 14% ranges) at 10.00% for the last 5 years. The last dividend increase was for 6% and it was in 2022.
The Dividend Payout Ratios (DPR) are too high, but are expected to improve. The DPR for EPS for 2021 is 160% with 5 year coverage at 75%. Next year, the DPR for EPS is expected to be around 103% and then falling to 92% in 2023. The DPR for Cash Flow per Share for 2021 is 60% with 5 year coverage at 49%. Both these are too high, but analysts expect them to fall over the next few years. The Free Cash Flow was been negative over the past 2 years and is expected to be negative over the next two years. Therefore, I cannot calculate and DPR for FCF.
Debt Ratios are fine, but Liquidity Ratio should improve. The Long Term Debt/Market Cap Ratio for 2021 is 0.60. This has increased in the first quarter of 2022 to 0.74. The Liquidity Ratio for 2021 is 0.69 and adding in Cash Flow after dividends only gets you to 0.51. However, these are a bit better in the first quarter of 2022 with the Liquidity Ratio at 0.91 and adding in cash flow after dividends gets you to 1.28. Still very low, but at least over 1.00. The Debt Ratio is better at 1.79. The Leverage and Debt/Equity Ratios are fine at 2.96 and 1.66.
The Total Return per year is shown below for years of 5 to 24 to the end of 2021 in CDN$. Under the Capital Gain column is the portion of the Total Return attributable to capital gains. Under the Dividend column is the portion of the Total Return attributable to dividends. See chart below.
| From | Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|---|
| 2016 | 5 | 8.75% | 15.02% | 9.91% | 5.11% |
| 2011 | 10 | 12.25% | 16.12% | 11.02% | 5.09% |
| 2006 | 15 | -0.71% | 8.29% | 4.15% | 4.15% |
| 2001 | 20 | -0.54% | 8.09% | 2.86% | 5.23% |
| 1997 | 24 | -0.05% | 8.22% | 2.36% | 5.86% |
The Total Return per year is shown below for years of 5 to 18 to the end of 2021 in US$. 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. |
|---|---|---|---|---|---|
| 2016 | 5 | 10.00% | 16.44% | 11.25% | 5.19% |
| 2011 | 10 | 9.80% | 13.32% | 8.69% | 4.63% |
| 2006 | 15 | -1.27% | 7.90% | 3.58% | 4.32% |
| 2003 | 18 | 0.60% | 8.68% | 3.25% | 5.43% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are 23.61, 25.80 and 27.99. The corresponding 10 year ratios are 23.61, 26.55 and 29.39. The corresponding historical ratios are 23.68, 27.16 and 30.43. The current 20.41 based on a stock price of $17.85 and EPS estimate for 2022 of $0.87 ($0.68 US$). This ratio is below the 10 year median ratios. This stock price testing suggests that the stock price is relatively cheap. This testing is in CDN$.
I have Adjusted Earnings per Share (AEPS). The 5 year low, median, and high median Price/AEPS Ratios are 1654, 19.85 and 23.16. The corresponding 10 year ratios are 18.63, 22.14 and 26.16. The current P/AESP Ratio is 18.76 based on a stock price of $17.85 and AEPS estimate for 2022 of $0.95 ($0.74 US$). The current ratio is between the low and median of the 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable and below the median. This testing is in CDN$.
I get a Graham Price of $14.52. The 10 year low, median, and high median Price/Graham Price Ratios are 1.25, 1.45 and 1.60. The current P/GP Ratio is 1.23 based on a stock price of $17.85. The current ratio is below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap. This testing is in CDN$.
I get a 10 year median Price/Book Value per Share Ratio of 1.67. The current P/B Ratio is 1.66 based on a stock price of $13.82, Book Value of $5,616M, and Book Value per Share of $8.34. The current ratio is 0.70% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median. This testing is in US$ and you will get similar results in CDN$.
I also have a Book Value per Share estimate for 2022. This will give a P/B Ratio of 1.48 based on the Book Value per Share estimate of $9.34, Book Value of $6,296M and a stock price of $13.82. This ratio is 11% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median. This testing is in US$ and you will get similar results in CDN$.
I get a 10 year median Price/Cash Flow per Share Ratio of 10.49. The current ratio is 11.15 based on Cash Flow per Share estimate for 2022 of $1.24, Cash Flow of $674M and a stock price of $13.82. The current ratio is 6% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median. This testing is in US$ and you will get similar results in CDN$.
I get an historical median dividend yield of 6.44%. The current yield is 5.21% based on dividends of $0.93 ($0.7232 US$) and a stock price of $17.85. The current yield is 19% below the historical median dividend yield. This stock price testing suggests that the stock price is relatively reasonable but above the median. This testing is in CDN$.
I get a 10 year median dividend yield of 4.53%. The current yield is 5.21% based on dividends of $0.93 ($0.7232 US$) and a stock price of $17.85. The current yield is 14.9% below the 10 year median dividend yield. This stock price testing suggests that the stock price is relatively reasonable and below the median. This testing is in CDN$.
The 10 year median Price/Sales (Revenue) Ratio is 2.94. The current P/S Ratio is 3.36 based on Revenue estimate for 2022 of $2,772M, Revenue per Share of $4.11 and a stock price of $13.82. The current ratio is 14.5% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median. This testing is in US$ and you will get similar results in CDN$.
Results of stock price testing is that the stock price is probably reasonable. The test results for the dividend yield and P/S Ratio tests are that the stock is under or over the median but still in a reasonable range. Some of the tests even say it is cheap.
When I look at analysts’ recommendations, I find Strong Buy (1), Buy (5), Hold (6), Underperform (1) and Sell (1). The consensus would be a Hold, but these recommendations are all over the place. The 12 month stock price consensus is $19.70 ($15.32 US$). This implies a total return of 15.57% with 10.36% from capital gains and 5.21% from dividends.
I found a comment by an analyst with Sell recommendation and he says that the growth rate has come down to 6.5% and he advises a partial sell. He says it still likes the dividend. Another one with an Underperform rating has a lower 12 month stock price of $13.00 US$ and also wonders about the incoming management team. When you get such a broad spread to recommendations, I do wonder why some say underperform and sell.
Analysts on Stock Chase like this company. One referred to its stable cash flow. Stock Chase gives the company 5 starts out of 5. Money Sense gives it a rating of B. Rajiv Nanjapla on Motley Fool thinks it is cheap with good dividend. Daniel Da Costa on Motley Fool thinks this is a safe stock for passive income. The company talks on Newswire about their fourth quarter results. The company talks on Newswire about their first quarter 2022 results. A Simply Wall Street report on Yahoo Finance talks about ownership of this company.
Algonquin Power & Utilities Corp is a North American generation, transmission, and distribution utility. Its web site is here Algonquin Power & Utilities Corp.
The last stock I wrote about was about was Maxar Technologies Ltd (TSX-MAXR, NYSE-MAXR) ... learn more. The next stock I will write about will be Goeasy Ltd (TSX-GSY, OTC-EHMEF) ... learn more on Wednesday, June 15, 2022 around 5 pm. Tomorrow on my other blog I will write about Which Books Should Investors Read .... learn more on Thursday, June 9, 2022 around 5 pm.
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