RE:RE:Just looking at the P/E ratio of ALAYes indeed. You have said very succinctly what I was getting at. Modest rate increases are not a problem even though the next rate case willl lag but the big ones don't always get reflected in the rates set - sometimes for political reasons. Currently I think ALA has just had some good outcomes with rate cases. But the offset for ALA, unlike other utilities, is they have the growing export business as well and that should provide some protection against a steep downside. However, I think all this kicks in IF ALA is fairly priced and this is where I see the current attaction of ALA. It is definitely underpriced on nearly every metric and if it continues to over deliver and under promise, gradually investors will bid it up to more normal multiples especially once they see that this years' earnings are higher than company guidance.
The other piece has to do with announcements of any partnerships on the renewables side and Randy is beginning to allude to these,... then there is the split up price once they are ready if so desired and the further monetization of assets such as MVP as it comes on stream,
The scepticism expressed about this company has been a great friend to me. I am in the process of removing all hedges as we move into what I believe will be a stronger finish to 2021 and early 2022. ( Hedges I have witten about through short calls.) I would not consider selling before it hits 28 sometime next year and even then I will re-assess but likely just lighten up.
I also like it that senior management compensation is tied to stock price performance so I do expect them to remain focussed on best returns.
Once the rating agencies see debt at target levels I also think their credit may be in for an upgrade - which larger funds would definitely like. There may be a tension between dividend increases and debt paydown but unless stock dilution takes place for what are seen as risky purposes, the future of ALA to me is bright. ( I know I know - the past stank and investors got hurt and dividends were slashed. ) But it is also true that Regulatory approval took longer than forseen at a time when these kind of deals became frowned on. So overpay or not, I really do think that history is history and they are left with good assets in a growing market. They should recover any investments made in any transition toward more renewables in future I think. Hydrogen may play a role in ALA's future - time will tell. Well.... looking forward to investor day to discover the new guidance and new dividend.
I must remind myself that they start with 20 million less in the 4th quarter than they might have had as they said it was added into income last quarter I still think over $1.90 is possible for the full year. Anyone else done their math? Your thoughts re year end.