Algonquin Power & Utilities Stock Slumps 19.2% on Interest Rates and Renewable Energy Costs

Algonquin Power & Utilities reported a larger than forecast Q3 adjusted loss and cut its full-year earnings guidance on Friday. The release saw $AQN shares fall 19.2% to its lowest in four-and-a-half years in Friday’s trading. The utility cited challenging macroeconomic conditions and construction delays which it expects will continue into next year. The company said higher interest rates cost it $23.3M during the quarter, and the timing of tax incentives relative to some of its renewable energy projects cost it $17.1M in the period.

    Algonquin Power & Utilities Q3 Earnings

    • Adjusted EBITDA of $276.1 million, +10% compared to the third quarter of 2021.
    • Non-GAAP EPS of $0.11 missed by $0.05. Decrease of 27% compared to the third quarter of 2021.
    • Revenue of $666.7M (+26.1% Y/Y) beat by $71.94M
    • Common Share Dividend of U.S.$0.1808 (C$0.2438) 

    AQN Stock Market Reaction

    • 52wk High $15.55 52wk Low $9.26
    • $9.30 -2.21 (19.20%) Market Close November 11, 2022 (Updated)
    • $9.30 -5.05 (35.19%) YTD
    • $9.30 -4.97 (34.83%) Past Year
    • $9.30 -1.33 (12.51%) past 5 years


    The company updated and lowered its previously disclosed Adjusted Net Earnings per common share estimate for the 2022 fiscal year from a range of $0.72-$0.77 to a range of $0.66-$0.69 vs. consensus of $0.74. 

    Arun Banskota, President and Chief Executive Officer said “Although our earnings were challenged, this past quarter AQN took important strides executing on our growth objectives across both the regulated and renewable sides of our business.

    On the regulated side, we are one step closer to completing the pending Kentucky Power acquisition, which is expected to add to our rate base, grow customer connections, and provide an opportunity to be part of the energy transition in Kentucky. The signing of our inaugural asset recycling transaction demonstrates the potential value of our existing renewable energy portfolio and greenfield pipeline. We continue to be excited about the prospects of our asset recycling program for 2023 and beyond.”

    Update on Longer-Term Targets – “Given the challenging macroeconomic environment, which is expected to continue into 2023, the Company is evaluating its longer-term targets and financial expectations. The Company intends to provide further details at its upcoming Investor and Analyst Day, expected to be held in early 2023.”

    The lowered guidance saw a quick downgrade from National Bank Financial to Sector Perform from Outperform with a US$13.50 price target, saying dividend increases likely are off the table for now.

    About Algonquin Power & Utilities Corp. and Liberty

    Algonquin Power & Utilities Corp., parent company of Liberty, is a diversified international generation, transmission, and distribution utility with over $17 billion of total assets. Through its two business groups, the Regulated Services Group and the Renewable Energy Group, AQN is committed to providing safe, secure, reliable, cost-effective, and sustainable energy and water solutions through its portfolio of electric generation, transmission, and distribution utility investments to over one million customer connections, largely in the United States and Canada.

    AQN is a global leader in renewable energy through its portfolio of long-term contracted wind, solar, and hydroelectric generating facilities. AQN owns, operates, and/or has net interests in over 4 GW of installed renewable energy capacity.

    Source: AQN

    From The TradersCommunity News Desk