| Valuation method | Value, $ | Upside, % |
|---|---|---|
| Artificial intelligence (AI) | 24.09 | -7 |
| Intrinsic value (DCF) | 9.60 | -63 |
| Graham-Dodd Method | n/a | |
| Graham Formula | 9.89 | -62 |
Algonquin Power & Utilities Corp. (NYSE: AQNB) is a diversified North American utility and renewable energy company headquartered in Oakville, Canada. Operating through its Regulated Services Group and Renewable Energy Group segments, AQNB provides essential electric, natural gas, and water utility services while maintaining a growing portfolio of renewable energy assets. The company serves over 1 million customers across the U.S. and Canada, combining stable regulated utility operations with higher-growth renewable energy projects. As a leader in sustainable infrastructure, Algonquin has committed to achieving net-zero greenhouse gas emissions by 2050, positioning itself at the forefront of the energy transition. With approximately $18.7 billion market capitalization, the company offers investors exposure to both defensive utility cash flows and renewable energy growth potential in the evolving North American energy landscape.
Algonquin Power & Utilities presents a mixed investment proposition. The company offers attractive defensive characteristics through its regulated utility operations, evidenced by its low beta (0.19) and consistent dividend (current yield ~6.5%). However, significant risks emerge from its $6.7 billion debt load and recent negative earnings (-$1.38 billion net income in FY2023). The renewable energy segment provides growth potential but faces execution risks and capital intensity. While the dividend appears sustainable given operating cash flows ($481.7 million), investors should monitor the company's ability to manage its substantial capital expenditures (-$872.4 million) and debt refinancing needs. The stock may appeal to income-focused investors comfortable with utility sector risks and renewable energy transition execution.
Algonquin Power & Utilities occupies a unique niche in the North American utility sector, combining traditional regulated utility operations with renewable energy development. Its competitive advantage stems from this dual-platform approach: the regulated utilities provide stable cash flows (approximately 70% of EBITDA), while the renewable energy segment offers growth potential in wind, solar, and hydroelectric generation. The company's scale in renewable energy (3+ GW capacity) gives it an edge over pure-play utilities in the energy transition, though it lacks the sheer size of major utility conglomerates. AQNB's vertically integrated water utilities provide additional differentiation. However, the company faces challenges in capital allocation between maintaining its dividend, funding renewable growth, and managing its leveraged balance sheet (debt-to-equity ratio ~1.5x). Its smaller size relative to major peers limits economies of scale in both regulated operations and renewable development. The company's focus on ESG principles strengthens its positioning with sustainability-focused investors but requires continued capital deployment that pressures cash flows.