MENU

Why Altagas Ltd. Is up Over 2%

Altagas Ltd. (TSX:ALA), one of North America’s largest owners and operators of energy infrastructure, released its third-quarter earnings results and announced a dividend increase this morning, and its stock has responded by rising more than 2% in early trading. The stock still sits more than 18% below its 52-week high of $35.55 reach back in October 2016, so let’s break down the quarterly results and the dividend increase to determine if we should be long-term buyers today.

The results that ignited the rally  

Here’s a quick breakdown of six of the most notable financial statistics from Altagas’s three-month period ended on September 30, 2017, compared with the same period in 2016:

Metric Q3 2017 Q3 2016 Change
Revenue $502 million $492 million 2.0%
Normalized EBITDA $190 million $176 million 8.0%
Normalized net income $48 million $38 million 26.3%
Normalized net income per share $0.28 $0.23 21.7%
Normalized funds from operations (FFO) $143 million $137 million 4.4%
Normalized FFO per share $0.83 $0.84 (1.2%)

Dividend hike? Yes, please!  

As a result of its strong operational performance, Altagas announced a 4.3% increase to its monthly dividend to $0.1825 per share, and this increase is effective for its December 15th payment.

Reiterating its outlook on 2017

In the press release, Altagas also reiterated its outlook on 2017, which calls for low double-digit percentage growth in normalized EBITDA and high single-digit percentage growth in normalized FFO.

What should you do with Altagas today?

It was a great quarter overall for Altagas, and it posted very strong results for the first nine months of fiscal 2017, including revenue growth of 18.5% to $1.81 billion, normalized net income growth of 22.1% to $0.83 per share, and normalized FFO growth of 3.6% to $2.57 per share.

With all of this being said, I think the market has responded correctly by sending its stock higher, and I think it still represents a very attractive long-term investment opportunity, because it’s one of the industry’s best growth stocks and because it sports a beautiful 7.5% yield after today’s increase. Foolish investors should take a closer look and strongly consider making Altagas a long-term core holding.

3,985 stocks listed between the TSX & TSXV, but here are the 5 we'd buy right now!

Overwhelmed by how many public companies there are to choose from in Canada? Motley Fool Canada Director of Research Iain Butler has you covered. Once a month, Iain and the rest of our team at Stock Advisor Canada reveal their five favourite Canadian stocks for new money now.

Considering they've walloped a "stuck in the mud" TSX by 10% over the past 4 years with truly life-changing winners like Shopify (up 236%, more than tripling your money), you'll probably want to have your front-row seat reserved when our next five "Best Buys Now" are released - exclusively on behalf of Stock Advisor Canada members.

To make sure your name is on the list, just click here now... before the curtain is lifted without you.

Fool contributor Joseph Solitro has no position in the companies mentioned. Altagas is a recommendation of Stock Advisor Canada.

I consent to receiving information from The Motley Fool via email, direct mail, and occasional special offer phone calls. I understand I can unsubscribe from these updates at any time. Please read the Privacy Statement and Terms of Service for more information.