AQN Stock Forecast & Price Target

Algonquin Power & Utilities Corp has shown a rate base growth of approximately 3% in the first nine months of 2024, indicating a robust expansion in its regulated services segment. The company is expected to achieve strong earnings per share (EPS) growth by 2026/27, driven by improved realized returns and a more sustainable dividend payout ratio, which is projected to enhance financial flexibility and balance sheet strength. Additionally, anticipated incremental earnings from rate cases, combined with a focus on cash flow retention, is likely to foster positive shareholder sentiment and strengthen investor confidence in the utility's future performance.

The financial analysis of Algonquin Power & Utilities Corp indicates a particularly weak earnings per share (EPS) forecast for 2025, estimated at $0.28, which is below consensus expectations of $0.30, primarily due to not earning returns on over $1 billion in assets and recognizing expenses without corresponding revenue recovery. The anticipated shortfall in EPS is further compounded by an expected below-authorized return on the rate base, putting pressure on the company's profitability. Additionally, the decision to pursue rate base growth amid regulatory challenges raises concerns over the sustainability of earnings and the company's ability to effectively manage its capital structure, contributing to a negative outlook on the stock.