ALTAGAS LTD (ALA.CA) Stock Fundamental Analysis
Canada - Toronto Stock Exchange - TSX:ALA - CA0213611001 - Common Stock
40.89 CAD
+0.14 (+0.34%)
Overall ALA gets a fundamental rating of 5 out of 10. We evaluated ALA against 6 industry peers in the Gas Utilities industry. There are concerns on the financial health of ALA while its profitability can be described as average. ALA is not valued too expensively and it also shows a decent growth rate. Finally ALA also has an excellent dividend rating.
1. Profitability
1.1 Basic Checks
- ALA had positive earnings in the past year.
- ALA had a positive operating cash flow in the past year.
- In the past 5 years ALA has always been profitable.
- Each year in the past 5 years ALA had a positive operating cash flow.
1.2 Ratios
- Looking at the Return On Assets, with a value of 2.87%, ALA belongs to the top of the industry, outperforming 83.33% of the companies in the same industry.
- The Return On Equity of ALA (8.75%) is better than 83.33% of its industry peers.
- ALA's Return On Invested Capital of 4.37% is in line compared to the rest of the industry. ALA outperforms 50.00% of its industry peers.
- The Average Return On Invested Capital over the past 3 years 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
- ALA's Profit Margin of 5.88% is amongst the best of the industry. ALA outperforms 83.33% of its industry peers.
- ALA's Profit Margin has declined in the last couple of years.
- 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 Gross Margin of 28.43%. This is in the lower half of the industry: ALA underperforms 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.
- ALA has more shares outstanding than it did 1 year ago.
- Compared to 5 years ago, ALA has more shares outstanding
- Compared to 1 year ago, ALA has an improved debt to assets ratio.
2.2 Solvency
- ALA has an Altman-Z score of 1.06. This is a bad value and indicates that ALA is not financially healthy and even 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 has a better Debt to FCF ratio (2558.25) than 66.67% of its industry peers.
- ALA has a Debt/Equity ratio of 1.15. This is a high value indicating a heavy dependency on external 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
WACC6.05%
2.3 Liquidity
- A Current Ratio of 0.88 indicates that ALA may have some problems paying its short term obligations.
- ALA has a better Current ratio (0.88) 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 has a Quick ratio (0.63) which is in line with 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%.
- Measured over the past years, ALA shows a quite strong growth in Earnings Per Share. The EPS has been growing by 13.25% on average per year.
- ALA shows a small growth in Revenue. In the last year, the Revenue has grown by 1.55%.
- The Revenue has been growing by 17.77% on average over the past years. This is quite good.
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
- ALA is expected to show a small growth in Earnings Per Share. In the coming years, the EPS will grow by 6.90% yearly.
- 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
- The EPS growth rate is decreasing: in the next years the growth will be less than in the last years.
- When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is decreasing.
4. Valuation
4.1 Price/Earnings Ratio
- The Price/Earnings ratio is 18.50, which indicates a rather expensive current valuation of ALA.
- ALA's Price/Earnings ratio is a bit cheaper when compared to the industry. ALA is cheaper than 66.67% of the companies in the same industry.
- ALA is valuated rather cheaply when we compare the Price/Earnings ratio to 27.21, which is the current average of the S&P500 Index.
- The Price/Forward Earnings ratio is 17.46, which indicates a rather expensive current valuation of ALA.
- Compared to the rest of the industry, the Price/Forward Earnings ratio of ALA is on the same level as its industry peers.
- The average S&P500 Price/Forward Earnings ratio is at 25.98. ALA is valued slightly cheaper when compared to this.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 18.5 | ||
| Fwd PE | 17.46 |
4.2 Price Multiples
- ALA's Enterprise Value to EBITDA ratio is a bit more expensive when compared to the industry. ALA is more expensive than 66.67% of the companies in the same industry.
- Based on the Price/Free Cash Flow ratio, ALA is valued a bit cheaper than 66.67% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 3180.22 | ||
| EV/EBITDA | 12.72 |
4.3 Compensation for Growth
- The high PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates an expensive valuation of the company.
- ALA has a very decent profitability rating, which may justify a higher PE ratio.
PEG (NY)5.67
PEG (5Y)1.4
EPS Next 2Y3.65%
EPS Next 3Y7.6%
5. Dividend
5.1 Amount
- With a Yearly Dividend Yield of 3.28%, ALA has a reasonable but not impressive dividend return.
- 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.
- ALA's Dividend Yield is rather good when compared to the S&P500 average which is at 1.81.
| 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 been paying a dividend for at least 10 years, so it has a reliable track record.
- As ALA did not decrease their dividend in the past 5 years, we can say the dividend looks stable.
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.
- The dividend of ALA is growing, but earnings are growing more, so the dividend growth is 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 18.5 and the Price/Book (PB) ratio is 1.49.
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%.