AltaGas (TSX: ALA) is a Canadian natural gas company that is active in both the utilities and midstream sectors. Its stock has been performing quite well lately, having risen 23.3% year to date, not counting dividends. The stock’s dividend yield is 3.1%, so its total return was likely close to 25% for the first half of the year. As a result of its consistent march upward this year, ALA stock is near a 52-week high. At the time of this writing (Monday evening), it had in fact closed at a 52-week high (I use the “near” phrasing to account for the possibility that it will have lost some of the momentum by Tuesday).
What’s been driving ALA’s big gains?
A major contributor to the company’s most recent leg up was its second quarter earnings release. On Friday, before markets opened, AltaGas released its earnings for the second quarter of 2025. The release mostly beat analyst expectations, triggering a 1.2% rally in ALA shares through the Friday trading day.
On a longer-term basis, Altagas may be benefitting from a broader bullish trend in midstream energy stocks, which have been performing comparatively well over the last 12 months. However, before concluding that AltaGas is only benefitting from sector momentum, we should take a look at the company-specific factors that may be driving its recent strong performance. That way, we’re in a position to determine whether ALA stock has further potential beyond its recent 52-week high price level.
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What AltaGas does
AltaGas is a company that specializes in natural gas, both midstream and utilities.
On the midstream side of things, AltaGas owns a number of natural gas storage facilities and export terminals. It is also building a pipeline called Pipestone II. Facilities such as these are used to transport natural gas from producers to end users.
On the utilities side, AltaGas operates natural gas utilities in the U.S. states of Michigan, Maryland, Virginia, and the District of Colombia.
Recent earnings
AltaGas’ most recent earnings release was a pretty good one, boasting metrics such as:
- $1.15 in earnings per share (EPS), up 0.87% year over year.
- $689 million in EBITDA, up 4.4%.
- $551 million in funds from operations, up 10%.
- 119,241 Bbl/d worth of gas exports to Asia, up 4%.
- 76% completion of construction on the Pipestone II Project.
Overall, it was a decent showing, with positive growth in most categories, as well as progress on new infrastructure projects that will pay dividends in the future.
Valuation
Now it’s time to look at ALA’s valuation multiples in light of what we’ve covered so far. At today’s prices, AltaGas stock trades at:
- 17.9 times earnings.
- 0.96 times sales.
- 1.5 times book.
- 8 times cash flow.
Overall, these multiples are fairly modest, especially compared to those of larger midstream companies. Based on these, I’d say that AltaGas is probably still an alright buy.
Foolish takeaway
Taking everything I’ve reviewed in this article into account, I think AltaGas is likely to be a decent buy today. I don’t know that it will be a massive market beater or anything, but it should produce at least satisfactory results.
