Is it a good company at a reasonable price? The stock price might be cheap, it is certainly reasonable. However, caution is called for as the company has just decreased their dividends. If you look at charts on how well different stock do over time on the TSX, dividend growth stocks are at the top, dividend stocks next, then non-dividend stock and at the bottom, dividend cutters.
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 dividends paying utility stocks. Also, I own Emera Inc. and this company owns shares in Algonquin Power.
When I was updating my spreadsheet, I noticed that Long Term Debt/Market Cap went up high to 1.59. This is due to increasing debt and falling stock price. For 2023 they cut their dividends by 40%. The CFO, over the past year, increased his stock in this company by 247%. The new CEO bought shares. One officer raised their shares by 17% and another officer decreased their shares by 94%.
If you had invested in this company in December 2012, for $1,005.48 CDN$ you would have bought 147 shares at $6.84 per share. In December 2022, after 10 years you would have received $1,060.86 in dividends. The stock would be worth $1,296.54. Your total return would have been $2,357.40. This is in CDN$.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $6.84 | $1,005.48 | 147 | 10 | $1,060.86 | $1,296.54 | $2,357.40 |
If you had invested in this company in December 2012, for $1,000.10 US$ you would have bought 146 shares at $6.85 per share. In December 2022, after 10 years you would have received $704.46 in dividends. The stock would be worth $951.92. Your total return would have been $1,656.38. This is in US$. In 2012, US$ and CDN$ exchange rates were much lower than today. Also, between 2012 and today, the company switch both the dividend payments and the Statement currency from CDN$ to US$.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $6.85 | $1,000.10 | 146 | 10 | $704.46 | $951.92 | $1,656.38 |
The current dividend yield is good with dividend growth stopped and dividends declining. The current dividend yield is good (5% to 6% ranges) at 5.09%. The 5, 10 and historical dividend yields are moderate (2% to 4% ranges) at 4.49%, 4.62% and 4.79%. Dividends were cut in 2008, then in 2010 restarted. Dividends have again been cut in 2023 by 40%.
The Dividend Payout Ratios (DPR) are generally awful. DPR for 2022 for Earnings per Share (EPS) is negative with 5 year coverage at 109%. The DPR for 2022 for Adjusted Earnings per Share (AEPS) is 102% with 5 year coverage at 89%. The DPR for 2022 for Cash Flow per Share is 57% with 5 year coverage at 55%. (DPR for CDPS is best if 40% or less.) The DPR for 2022 for Adjusted Funds from Operations (AFFO) is 55% with 5 year coverage at 51%. The DPR for 2022 for Free Cash Flow is negative as FCF is negative.
| Item | Cur | 5 Years |
|---|---|---|
| EPS | -212.97% | 109.28% |
| AEPS | 101.86% | 89.15% |
| CFPS | 56.67% | 54.51% |
| AFFO | 55.13% | 50.81% |
| FCF | -80.55% | -70.59% |
Debt Ratios are generally not good. The long Term Debt/Market Cap Ratio for 2022 is 1.59 and too high. It is currently at 1.26 and this is too high. It means that the value of the company using the Market Cap is lower than the company’s debt. This ratio should not be higher than 1.00 and is better at 0.50. The Liquidity Ratio for 2022 is too low at 0.71 and even with Cash Flow after dividends is too low at 0.81. It currently is better with a ratio of 1.08 with Cash flow after dividends. However, a good ratio is 1.50 and above.
The Debt Ratio is good at 1.63. The Leverage and Debt/Equity Ratios are too high at 3.50 and 2.14. I prefer them to be below 3.00 and 2.00.
| Type | Ratio '22 | Ratio Curr |
|---|---|---|
| Lg Term | 1.59 | 1.26 |
| Intang/GW | 0.32 | 0.25 |
| Liquidity | 0.71 | 0.75 |
| Liq. + CF | 0.81 | 1.08 |
| Liq. CF DB | 1.11 | 1.95 |
| Debt Ratio | 1.63 | 1.65 |
| Leverage | 3.50 | 3.39 |
| D/E Ratio | 2.14 | 2.05 |
The Total Return per year is shown below for years of 5 to 25 to the end of 2022 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. |
|---|---|---|---|---|---|
| 2017 | 5 | 10.24% | -2.22% | -8.90% | 6.68% |
| 2012 | 10 | 12.72% | 10.15% | 2.57% | 7.57% |
| 2007 | 15 | 0.23% | 6.17% | 0.32% | 5.86% |
| 2002 | 20 | 1.09% | 7.00% | -0.25% | 7.26% |
| 1997 | 25 | 0.55% | 6.79% | -0.68% | 7.47% |
The Total Return per year is shown below for years of 5 to 19 to the end of 2022 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. |
|---|---|---|---|---|---|
| 2017 | 5 | 8.56% | -3.56% | -10.19% | 6.63% |
| 2012 | 10 | 9.29% | 6.35% | -0.49% | 6.84% |
| 2007 | 15 | -1.85% | 3.74% | -1.76% | 5.50% |
| 2003 | 19 | 1.87% | 6.03% | -1.15% | 7.18% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are 10.02, 12.02 and 14.03. The corresponding 10 year ratios are 23.16, 28.12 and 25.87. The corresponding historical ratios are 23.61, 27.16 and 30.32. The current P/E Ratio is 10.78 based on a stock price of $11.44 and EPS estimate for 2023 of $1.06 ($0.79 US$). The current ratio is below the low ratio of the 10 year median ratios and is also quite low for a P/E Ratio. This stock price testing suggests that the stock price is relatively cheap. This testing is done in CDN$.
I also have Adjusted Earnings per Share (AEPS) data. The 5-year low, median, and high median Price/Adjusted Earnings per Share Ratios are 14.98, 19.29 and 23.17. The corresponding 10 year ratios are 16.44, 20.22 and 24.08. The current P/AEPS Ratio is 14.71 based on a stock price of $8.53 and AEPS estimate of $0.58. The current ratio is below the low ratios of the 10 year median ratios. This stock price testing suggests that the stock price is relatively cheap. This testing is in US$ and you would get similar results in CDN$.
I also have Adjusted Funds from Operations (AFFO) data. The 5-year low, median, and high median Price/Adjusted Funds from Operations Ratios are 8.88, 10.83 and 12.78. The corresponding 10 year ratios are 8.01, 9.25 and 11.50. The current P/AFFO ratio is 6.77 based on a stock price of $8.53 and AFFO for the last 12 months of $854.80 and AFFO per Share of $1.26. The current ratio is below the low ratio of the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap. This testing is in US$ and you would get similar results in CDN$.
I get a Graham Price of $13.50. The 10-year low, median, and high median Price/Graham Price Ratios are 1.09, 1.28 and 1.50. The current P/GP Ratio is 0.85 based on a stock price of $11.44. The current P/GP Ratio is below the low ratio of the 10 year median ratios. This stock price testing suggests that the stock price is relatively cheap. This testing is done in CDN$.
I get a 10-year median Price/Book Value per Share Ratio of 1.67. The current P/B Ratio is 1.10 based on a stock price of $8.53, Book Value of $2,292M and Book Value per Share of $7.74. The current ratio is 34% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap. This testing is in US$ and you would get similar results in CDN$.
I also have Book Value per Share estimate for 2023 of $8.20. This implies a Book Value of $7,056M and a ratio of 1.04 with a stock price of $8.53. Because this analyst calculated Book Value per Share differently from me, here the 10 year median P/B Ratio is 1.57. The current ratio of 1.04 is 33.7% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap. This testing is in US$ and you would get similar results in CDN$.
I get a 10-year median Price/Cash Flow per Share Ratio of 10.49. The current P/CF Ratio is 7.29 based on Cash Flow per Share estimate for 2023 of $1.17, Cash Flow of $683.6M and a stock price of $8.53. The current ratio is 30.5% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap. This testing is in US$ and you would get similar results in CDN$.
I get an historical median dividend yield of 4.79%. The current dividend yield is 5.09% based on dividends of $0.434 and a Stock Price of $8.53. The current dividend is 6% above the historical median dividend yield. This stock price testing suggests that the stock price is relatively reasonable and below the median. This testing is in US$ and you would get similar results in CDN$. Also note that dividend is currently being decreased.
I get a 10 year median dividend yield of 4.62%. The current dividend yield is 5.09% based on dividends of $0.434 and a Stock Price of $8.53. The current dividend is 10% above the 10 year median dividend yield. This stock price testing suggests that the stock price is relatively reasonable and below the median. This testing is in US$ and you would get similar results in CDN$. Also note that dividend is currently being decreased.
The 10-year median Price/Sales (Revenue) Ratio is 2.80. The current P/S Ratio is 2.04 based on Revenue estimate for 2023 of $2,854M, Revenue per Share of $4.17 and a stock price of $8.53. The current ratio is 27% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap. This testing is in US$ and you would get similar results in CDN$.
Results of stock price testing is that the stock price is reasonable and maybe cheap. The dividend yield tests are showing stock price as reasonable. The P/S Ratio test is showing the stock price as cheap. All the other tests are showing the stock price as cheap. The dividend yield test is different because of recent dividend cuts.
When I look at analysts’ recommendations, I find Strong Buy (1) Buy (3), Hold (10) and Sell (1). The consensus would be a Hold. The 12 month stock price consensus $11.51 ($8.57 US$). This implies a total return of 5.74% with 0.65% from capital gains and 5.10% from dividends.
Analyst on Stock Chase gives this stock ratings of Buy, Hold and Sell. Stock Chase gives this stock 5 stars out of 5. It is on the Money Sense list ranking at 85. Joey Frenette on Motley Fool says it is getting too cheap. Rajiv Nanjapla on Motley Fool says this is a good stock for income seekers, as the company has taken the appropriate steps. The company put out a press release on newswire about their 2022 results. The company put out a press release on Newswire about their first quarter of 2023 results.
Simply Wall Street put out a report on Yahoo Finance on who owns this company. Simply Wall Street gives out two warnings on this stock of interest payments are not well covered by earnings; and dividend of 5% is not well covered by earnings or cash flows. Simply Wall Street gives this stock 1 and one half stars out of 5.
Algonquin Power & Utilities Corp, a parent company of Liberty, is a diversified international generation, transmission, and distribution utility. It has two business groups, the Regulated Services Group, and the Renewable Energy Group. They have customer in the United States and Canada. AQN provides renewable energy through its portfolio of long-term contracted wind, solar, and hydroelectric generating facilities. Its web site is here Algonquin Power & Utilities Corp.
The last stock I wrote about was about was Ensign Energy Services (TSX-ESI, OTC-ESVIF) ... learn more. The next stock I will write about will be Goeasy Ltd (TSX-GSY, OTC-EHMEF) ... learn more on Wednesday, June 14, 2023 around 5 pm. Tomorrow on my other blog I will write about Dividend Investing.... learn more on Tuesday, June 13, 2023 around 5 pm.
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