In May we said the easy money had been made in Algonquin (AQN) stock, as valuations caught up to the peer group after management’s commitment to give guidance out to 2027 at its June 3rd investor day.
The stock sold off since, with some analyst downgrades (currently 12 holds, 1 buy) and no movement in forward estimates. Yesterday’s investor update got the stock moving again, up 16% on a long-term EPS guide well ahead of expectations.
The company plans to get there by leaning out the cost structure and investing $2.5B into the growth of its utility asset base - all without issuing equity, a funding source the company became too reliant on previously.
If AQN can deliver $0.44 of EPS in 2027 (mid-point of guidance), the stock should still have upside as it closes the valuation gap to peers (~20% discount on 2027). Combine that with a ~5% dividend and the potential for a few analyst upgrades, and we’re not as quick to take profits this time around.
For a refresh on the story, check out our original pitch from February.
