Key Points
It missed on 2027 profitability guidance.
Investors focused on that, rather than the pair of trailing quarterly beats.
It seemed as if someone had switched off the power supplying Algonquin Power & Utilities(NYSE: AQN) stock on the last trading day of the week. Investors aggressively sold out of the veteran utility's equity that day, as they were clearly disappointed by the company's 2027 guidance miss in its latest earnings report. The stock closed that trading session down more than 12%.
Twin increases
Well before market open on Friday, Algonquin took the wraps off its fourth-quarter and full-year 2025 results. For the three-month stretch, the utility's revenue was $630.7 million, representing year-over-year growth of almost 8%. Net income not under generally accepted accounting principles (GAAP) rose more steeply, increasing by 11% to $47.2 million ($0.06 per share).
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That meant a pair of beats for Algonquin, since analysts tracking the stock were averaging estimates of $616.6 million for revenue, and $0.05 per share for non-GAAP (adjusted) net income.
Algonquin has slimmed down, from a sprawling business straddling both traditional and next-generation renewable utility services to a more pure-play business focusing on the former.
It cited this "back to basics" strategy as a factor in its growth during the quarter. The company quoted CEO Rod West as saying that "During the year, we made substantial regulatory progress across our electric, gas and water utilities, began realizing the benefits of a more disciplined operating model."
Power shortage
West and his team reaffirmed the company's full-year 2026 profitability guidance, maintaining its adjusted net income forecast of $0.35 to $0.37 per share. They also set a forecast for the following year of $0.38 to $0.42 per share. The per-share consensus analyst estimates for the two years are $0.36 and $0.45, respectively.
That means a projected bottom-line miss on 2027, which didn't make Mr. Market all that happy. Personally, I don't think the company deserved such a robust sell-off on the results, as it's still an important operator and it seems to be going in the right direction with the corporate diet it's on. I'd consider this a potential bargain on the price decline.
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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
