Algonquin Power & Utilities Corp T.AQN

RE:Good analysis

[AlwaysLong683]

NewOpportunist wrote: Good discussion of AQN

https://www.tawcan.com/is-aqns-dividend-safe-should-i-continue-investing/

Thanks for the link New.

The bottom line for me is management really messed up what should be a relatively straightforward business (utilities and power). The only way you can really blow it in this sector is by taking on too much debt, paying out a dividend that is more generous than justified by your opertations, and/or growing too fast and accumulating / overpaying in acquiring too many assets only to have to turn around and sell some when times get tough. Also, solely focusing on renewables instead of a go-slow approach like FTS and EMA are taking is by definition higher risk even though you still get the plum that is regulated utitities. That's why I've never owned shares in AQN, though I'm intrigued by the story since the November 11 earnings release and subsequent fall in share price.

Nonetheless, any management team worth their salaries in a sector like this should realize that interest rates and inflation will not stay at rock bottom levels forever and must be suitably conservative with their company strategy to prepare for the inevitable. AQN did not do this and is now paying the price. Investor Day will be critical as CEO Arun Banskota will have to present a plan moving forward that will be seen as prudent and attractive enough to convince the market that he is on the right track and thus restore faith in the company. Until then, AQN's share price may just tread water.