Value
7.3/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 5.5 |
| P/S | 9.2 |
| EV/EBITDA | 4.6 |
| Fwd P/E | 8.4 |
| PEG | 10.0 |
| Analyst target | 5.0 |
- ▸Forward P/E: 13.8x
- ▸PEG: 0.20
- ▸Attractively valued
AQN · Why this verdict
Why Algonquin Power & Utilities Cor (AQN) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results. How we score · Editorial policy
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VerdictSELL
Overall score5.3/10
ConfidenceMEDIUM
MacroNEUTRAL
TrendMatrix Research · core thesis
Engine thesis — one sentence
Algonquin looks cheap (forward P/E 13.4x) with a consistent earnings-beat record, but negative free cash flow, 7.2 debt-to-equity and only 4.4% upside versus 8.2% downside make the risk/reward unattractive.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
Algonquin has beaten earnings estimates in 3 of the last 4 quarters with an average surprise of 28.7% and no misses in that span. Earnings | The next report on 2026-11-06 and subsequent quarters keep beating estimates by a positive average surprise. | ↑Improving |
| CounterEstimates are tiny ($0.03-$0.13 per share), so large percentage surprises come from small absolute differences and a 2025 miss shows reversals occur. | ||
The stock is attractively valued at a forward P/E of 13.4x and PEG of 0.19 while the utilities sector is out of favor, offering a rotation-style recovery. Valuation breakdown | Valuation multiple expands toward the 5.7 analyst target as sector sentiment improves. | ↓Deteriorating |
| CounterOnly 4.4% upside to the analyst target leaves little room, and cheap valuation may reflect balance-sheet stress. | ||
Earnings quality is a red flag: free cash flow is -54% of net income, so reported profits are not converting into cash. Quality breakdown | FCF/net income turns positive within 12 months as capital spending normalizes. | →Stable |
| CounterUtilities invest heavily in rate-base growth, so negative FCF may be temporary capex that later earns regulated returns. | ||
Debt-to-equity of 7.2 combined with a dividend-safety score of 2.0 and a yield-trap warning means the payout is at risk. Bear case | Leverage falls below 5 and the dividend safety score improves above 4. | →Stable |
| CounterRegulated utilities typically carry high leverage supported by stable allowed returns, so the ratio overstates risk. | ||
Upside to the analyst target is 4.4% against 8.2% downside to the stop, a reward-to-risk of 0.53 five days before earnings. Reward-to-risk math | Price pulls back or targets rise so reward-to-risk improves above 1.5. | →Stable |
| CounterA beat-prone earnings history could drive a rerating that makes the static target obsolete. | ||
Algonquin has beaten earnings estimates in 3 of the last 4 quarters with an average surprise of 28.7% and no misses in that span.
↑ImprovingEarnings
- Expectation
- The next report on 2026-11-06 and subsequent quarters keep beating estimates by a positive average surprise.
CounterEstimates are tiny ($0.03-$0.13 per share), so large percentage surprises come from small absolute differences and a 2025 miss shows reversals occur.
The stock is attractively valued at a forward P/E of 13.4x and PEG of 0.19 while the utilities sector is out of favor, offering a rotation-style recovery.
↓DeterioratingValuation breakdown
- Expectation
- Valuation multiple expands toward the 5.7 analyst target as sector sentiment improves.
CounterOnly 4.4% upside to the analyst target leaves little room, and cheap valuation may reflect balance-sheet stress.
Earnings quality is a red flag: free cash flow is -54% of net income, so reported profits are not converting into cash.
→StableQuality breakdown
- Expectation
- FCF/net income turns positive within 12 months as capital spending normalizes.
CounterUtilities invest heavily in rate-base growth, so negative FCF may be temporary capex that later earns regulated returns.
Debt-to-equity of 7.2 combined with a dividend-safety score of 2.0 and a yield-trap warning means the payout is at risk.
→StableBear case
- Expectation
- Leverage falls below 5 and the dividend safety score improves above 4.
CounterRegulated utilities typically carry high leverage supported by stable allowed returns, so the ratio overstates risk.
Upside to the analyst target is 4.4% against 8.2% downside to the stop, a reward-to-risk of 0.53 five days before earnings.
→StableReward-to-risk math
- Expectation
- Price pulls back or targets rise so reward-to-risk improves above 1.5.
CounterA beat-prone earnings history could drive a rerating that makes the static target obsolete.
Per-dimension breakdown
Quality
3.4/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 0.8 |
| ROA | 1.6 |
| Gross margin | 3.4 |
| Op margin | 6.3 |
| Net margin | 2.9 |
| Current ratio | 3.5 |
| FCF quality | 0.0 |
| Moat | 4.5 |
| Piotroski F | 7.8 |
- ▸Earnings quality RED FLAG: -54% FCF/NI
- ▸No competitive moat
- ▸Strong Piotroski F-Score: 7/9
Growth
6.7/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 3.3 |
| EPS growth | 10.0 |
Momentum
5.4/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 3.1 |
| MACD | 7.3 |
| OBV | 10.0 |
| MA position | 6.0 |
| Volume | 0.5 |
- ▸Volume accumulation (rising OBV)
- ▸Below 200-MA, MA slope -1.9%/30d — confirmed downtrend
Sentiment
5.7/10data confidence 100%| Component | Sub-score |
|---|---|
| LLM sentiment | 4.8 |
| Analyst rating | 5.0 |
| Price target | 7.5 |
Insider
5.0/10data confidence 50%Peer rank
3.1/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 3.3 |
| quality rank | 0.8 |
| growth rank | 3.3 |
Technical
2.9/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 1.2 |
| support resistance | 1.3 |
| 52w position | 6.1 |
Risk (lower is worse)
5.6/10data confidence 100%| Component | Sub-score |
|---|---|
| days to cover | 7.5 |
| volatility | 7.5 |
| put call | 0.0 |
| implied vol | 6.9 |
| beta | 7.4 |
| debt equity | 4.3 |
- ▸Elevated put/call: 40.00
Catalyst
6.7/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 10.0 |
| earnings timing | 5.0 |
| surprise avg | 10.0 |
| dividend safety | 2.0 |
| news activity | 8.0 |
- ▸Strong earnings: 3B/0M
- ▸Earnings in 2 days
- ▸Yield trap warning: high yield but unsafe
How the verdict was assembled
Engine trigger
Quality below minimum threshold.
Engine technical detail
verdict_path:
L1:HARD_BLOCK:QUALITY_FLOORPassed (5)
- MOMENTUM:5.4>=4.5
- INSIDER:OK
- 8K:CLEAN
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (2)
- ASYMMETRY:0.3<1.5@spot
- EARNINGS_PROXIMITY:2d<=7d
Warning (2)
- MOMENTUM:5.4<5.5 (soft — BUY_NOW allowed but watch)
- DEATH_CROSS:momentum=5.4>=5.0 recovering
Reward-to-Risk
0.30
Upside
+2.9%
Downside
9.6%
Sizing output
AVOID
SetupRecovery — Death cross but MACD improving, RSI 69
EdgeSector Rotation — Utilities sector out of favor, value=7.3
SuitabilityAggressive — MCap $4.3B<$5B
Investment implication
The SELL_IF_HOLDING verdict reflects the ASYMMETRY gate's 0.3<1.5@spot outcome against Value at 7.3 and asymmetric R:R of 0.30.
The strongest dimensions are Value at 7.3, Growth at 6.7, and Catalyst at 6.7; the weakest are Technical at 2.9, Peer rank at 3.1, and Quality at 3.4. The V9 engine flagged 2 failed gates with 2 warnings, producing an asymmetric reward-to-risk of 0.30 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Earnings Beat Consistency
Trip ifEPS surprise stays below 0% for 2 consecutive quarters.
- P2Cheap Valuation Sector Out Of Favor
Trip ifForward P/E rises above 20x without a corresponding rise in earnings estimates.
- P3Negative Fcf Earnings Quality
Trip ifFCF/net income stays below -50% for 4 more quarters.
- P4High Leverage Yield Trap
Trip ifDebt-to-equity exceeds 8.0 from current 7.2.
- P5Poor Risk Reward Near Term
Trip ifReward-to-risk falls below 0.3 from current 0.53.