The numbersValuation and Projections:
Altagas
2016A 2017A 2018E 2019E 2020E
Debt Analysis Net Debt/EBITDA 5.5x 5.6x 9.3x 4.8x 4.8x
EBITDA (M) $701 $797 $1,001 $1,282 $1,291
Total Debt (M) $3,879 $3,672 $9,470 $6,220 $6,251
Payout Ratio 85.0% 82.1% 118.9% 47.5% 43.9%
Price/Adj. EPS 34.8x 24.0x 16.7x 11.8x 10.0x
Price/Cash Flow 10.0x 9.1x 7.2x 4.2x 3.8x
Enbridge
2016A 2017A 2018E 2019E 2020E
Net Debt/EBITDA 5.9x 6.3x 4.8x 4.8x 4.3x
Ebitda $6,902 $10,317 $12,701 $12,982 $14,372
Total Debt (M) $41,568 $65,180 $60,974 $62,574 $62,574
Payout Ratio 52.0% 66.2% 61.1% 66.2% 65.1%
Price/Adj. EPS 25.0x 25.3x 16.2x 17.4x 15.3x
Price/Cash Flow 9.2x 10.9x 7.6x 8.6x 7.8x
Inter Pipeline
2016A 2017A 2018E 2019E 2020E
Net Debt/EBITDA 5.6x 4.6x 4.6x 5.0x 5.3x
Total Debt (M) $5,806 $5,708 $5,708
Payout Ratio 68.2% 64.2% 66.0% 76.1% 81.1%
Price/Adj. EPS 21.4x 17.6x 12.6x 14.6x 15.3x
Price/Cash Flow 12.0x 9.8x 7.0x 8.2x 8.8x
Algonquin Power
2016A 2017A 2018E 2019E 2020E
Debt/EBITDA 8.1x 4.4x 5.3x 4.9x 4.7x
EBITDA (M) $361 $682 $719 $831 $904
Payout Ratio 98.4% 80.8% 91.3% 83.1% 84.9%
Price/Adj. EPS 20.2x 19.8x 18.3x 15.7x 14.6x
Price/Cash Flow 10.6x 10.3x 8.9x 8.7x 8.2x
It looks as though Altagas is trading at half price from a price to cash flow basis and from an EPS basis as well. They have the lowest payout ratio. Every company in the space trades at about 8x Price to cashflow except for ALA Which currently trades at 4.2x. It's also worthly to note that the riskiest investment currently looks to be AQN Algonquin power which is the market favorite. AQN also leveraged up the balance sheet to over 8x debt to ebitda and recovered quickly in 2016. They became the market darling after that. ALA looks to have a fast recovery imminent and times change fast in the market. ALA looks to be trading at a 50% discount if you believe that is a fair value for the company that is your own personal choice. I'm betting times change eventually and Utilities look to be coming back into favor so I'd imagine the depressed values and multiples of all the companies should improve over time.