ALTAGAS LTD (ALA.CA) Stock Fundamental Analysis
Canada - Toronto Stock Exchange - TSX:ALA - CA0213611001 - Common Stock
41.58 CAD
+0.69 (+1.69%)
Taking everything into account, ALA scores 5 out of 10 in our fundamental rating. ALA was compared to 6 industry peers in the Gas Utilities industry. While ALA is still in line with the averages on profitability rating, there are concerns on its financial health. ALA has a correct valuation and a medium growth rate. Finally ALA also has an excellent dividend rating.
1. Profitability
1.1 Basic Checks
- In the past year ALA was profitable.
- ALA had a positive operating cash flow in the past year.
- Each year in the past 5 years ALA has been profitable.
- ALA had a positive operating cash flow in each of the past 5 years.
1.2 Ratios
- ALA has a Return On Assets of 2.87%. This is amongst the best in the industry. ALA outperforms 83.33% of its industry peers.
- With an excellent Return On Equity value of 8.75%, ALA belongs to the best of the industry, outperforming 83.33% of the companies in the same industry.
- ALA has a Return On Invested Capital (4.37%) which is comparable to the rest of the industry.
- Measured over the past 3 years, the Average Return On Invested Capital for ALA is in line with the industry average of 5.31%.
- The 3 year average ROIC (3.44%) for ALA is below the current ROIC(4.37%), indicating increased profibility in the last year.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 2.87% | ||
| ROE | 8.75% | ||
| ROIC | 4.37% |
ROA(3y)2.2%
ROA(5y)1.99%
ROE(3y)6.76%
ROE(5y)6.1%
ROIC(3y)3.44%
ROIC(5y)3.31%
1.3 Margins
- With an excellent Profit Margin value of 5.88%, ALA belongs to the best of the industry, outperforming 83.33% of the companies in the same industry.
- In the last couple of years the Profit Margin of ALA has declined.
- The Operating Margin of ALA (10.21%) is comparable to the rest of the industry.
- ALA's Operating Margin has improved in the last couple of years.
- ALA has a worse Gross Margin (28.43%) than 66.67% of its industry peers.
- In the last couple of years the Gross Margin of ALA has declined.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 10.21% | ||
| PM (TTM) | 5.88% | ||
| GM | 28.43% |
OM growth 3Y-1.16%
OM growth 5Y32.51%
PM growth 3Y28.76%
PM growth 5Y-19.79%
GM growth 3Y-1.26%
GM growth 5Y-8.77%
2. Health
2.1 Basic Checks
- ALA has a Return on Invested Capital (ROIC), which is below the Cost of Capital (WACC), which means it is destroying value.
- Compared to 1 year ago, ALA has more shares outstanding
- Compared to 5 years ago, ALA has more shares outstanding
- The debt/assets ratio for ALA has been reduced compared to a year ago.
2.2 Solvency
- Based on the Altman-Z score of 1.06, we must say that ALA is in the distress zone and has some risk of bankruptcy.
- ALA has a Altman-Z score of 1.06. This is amongst the best in the industry. ALA outperforms 100.00% of its industry peers.
- ALA has a debt to FCF ratio of 2558.25. This is a negative value and a sign of low solvency as ALA would need 2558.25 years to pay back of all of its debts.
- ALA's Debt to FCF ratio of 2558.25 is fine compared to the rest of the industry. ALA outperforms 66.67% of its industry peers.
- A Debt/Equity ratio of 1.15 is on the high side and indicates that ALA has dependencies on debt financing.
- The Debt to Equity ratio of ALA (1.15) is comparable to the rest of the industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 1.15 | ||
| Debt/FCF | 2558.25 | ||
| Altman-Z | 1.06 |
ROIC/WACC0.72
WACC6.07%
2.3 Liquidity
- ALA has a Current Ratio of 0.88. This is a bad value and indicates that ALA is not financially healthy enough and could expect problems in meeting its short term obligations.
- The Current ratio of ALA (0.88) is better than 66.67% of its industry peers.
- ALA has a Quick Ratio of 0.88. This is a bad value and indicates that ALA is not financially healthy enough and could expect problems in meeting its short term obligations.
- ALA's Quick ratio of 0.63 is in line compared to the rest of the industry. ALA outperforms 50.00% of its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 0.88 | ||
| Quick Ratio | 0.63 |
3. Growth
3.1 Past
- ALA shows a small growth in Earnings Per Share. In the last year, the EPS has grown by 1.84%.
- ALA shows quite a strong growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 13.25% yearly.
- Looking at the last year, ALA shows a small growth in Revenue. The Revenue has grown by 1.55% in the last year.
- Measured over the past years, ALA shows a quite strong growth in Revenue. The Revenue has been growing by 17.77% on average per year.
EPS 1Y (TTM)1.84%
EPS 3Y7.19%
EPS 5Y13.25%
EPS Q2Q%-71.43%
Revenue 1Y (TTM)1.55%
Revenue growth 3Y5.59%
Revenue growth 5Y17.77%
Sales Q2Q%-5.84%
3.2 Future
- Based on estimates for the next years, ALA will show a small growth in Earnings Per Share. The EPS will grow by 6.90% on average per year.
- Based on estimates for the next years, ALA will show a small growth in Revenue. The Revenue will grow by 4.83% on average per year.
EPS Next Y3.27%
EPS Next 2Y3.65%
EPS Next 3Y7.6%
EPS Next 5Y6.9%
Revenue Next Year1.92%
Revenue Next 2Y3.98%
Revenue Next 3Y4.83%
Revenue Next 5YN/A
3.3 Evolution
- When comparing the EPS growth rate of the last years to the growth rate of the upcoming years, we see that the growth is decreasing.
- The Revenue growth rate is decreasing: in the next years the growth will be less than in the last years.
4. Valuation
4.1 Price/Earnings Ratio
- A Price/Earnings ratio of 18.81 indicates a rather expensive valuation of ALA.
- Based on the Price/Earnings ratio, ALA is valued a bit cheaper than the industry average as 66.67% of the companies are valued more expensively.
- ALA's Price/Earnings ratio indicates a valuation a bit cheaper than the S&P500 average which is at 27.25.
- ALA is valuated rather expensively with a Price/Forward Earnings ratio of 17.75.
- The rest of the industry has a similar Price/Forward Earnings ratio as ALA.
- When comparing the Price/Forward Earnings ratio of ALA to the average of the S&P500 Index (25.98), we can say ALA is valued slightly cheaper.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 18.81 | ||
| Fwd PE | 17.75 |
4.2 Price Multiples
- Compared to the rest of the industry, the Enterprise Value to EBITDA ratio of ALA indicates a slightly more expensive valuation: ALA is more expensive than 66.67% of the companies listed in the same industry.
- ALA's Price/Free Cash Flow ratio is a bit cheaper when compared to the industry. ALA is cheaper than 66.67% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 3233.89 | ||
| EV/EBITDA | 12.84 |
4.3 Compensation for Growth
- The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates an expensive valuation of the company.
- The decent profitability rating of ALA may justify a higher PE ratio.
PEG (NY)5.76
PEG (5Y)1.42
EPS Next 2Y3.65%
EPS Next 3Y7.6%
5. Dividend
5.1 Amount
- ALA has a Yearly Dividend Yield of 3.28%.
- Compared to an average industry Dividend Yield of 2.17, ALA pays a better dividend. On top of this ALA pays more dividend than 83.33% of the companies listed in the same industry.
- Compared to an average S&P500 Dividend Yield of 1.82, ALA pays a better dividend.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 3.28% |
5.2 History
- The dividend of ALA has a limited annual growth rate of 0.74%.
- ALA has paid a dividend for at least 10 years, which is a reliable track record.
- ALA has not decreased its dividend in the past 5 years, so it has a somewhat stable track record.
Dividend Growth(5Y)0.74%
Div Incr Years5
Div Non Decr Years5
5.3 Sustainability
- 52.48% of the earnings are spent on dividend by ALA. This is a bit on the high side, but may be sustainable.
- ALA's earnings are growing more than its dividend. This makes the dividend growth sustainable.
DP52.48%
EPS Next 2Y3.65%
EPS Next 3Y7.6%
ALTAGAS LTD / ALA.CA FAQ
What is the fundamental rating for ALA stock?
ChartMill assigns a fundamental rating of 5 / 10 to ALA.CA.
Can you provide the valuation status for ALTAGAS LTD?
ChartMill assigns a valuation rating of 4 / 10 to ALTAGAS LTD (ALA.CA). This can be considered as Fairly Valued.
Can you provide the profitability details for ALTAGAS LTD?
ALTAGAS LTD (ALA.CA) has a profitability rating of 6 / 10.
Can you provide the PE and PB ratios for ALA stock?
The Price/Earnings (PE) ratio for ALTAGAS LTD (ALA.CA) is 18.81 and the Price/Book (PB) ratio is 1.52.
How sustainable is the dividend of ALTAGAS LTD (ALA.CA) stock?
The dividend rating of ALTAGAS LTD (ALA.CA) is 7 / 10 and the dividend payout ratio is 52.48%.