Algonquin Power Beats on Adjusted EPS, But GAAP Falls
Algonquin Power reported Q3 adjusted earnings of $88.1 million, up from $69 million a year ago, beating estimates for the fourth consecutive quarter. However, Empire Electric's favorable weather contr
Algonquin Q3 Adjusted Beat Masks GAAP Earnings Drop
NEW YORK, November 7 —
Algonquin Power & Utilities Corp. (AQN) reported Q3 2026 adjusted earnings of $88.1 million, up from $69 million a year ago, but the entire year-over-year improvement traces to a single variable: weather. Empire Electric's favorable conditions contributed $20.4 million to the adjusted result, exceeding the $19.1 million full gain, while GAAP earnings fell to $57.6 million from $71 million.
- Q3 adjusted EPS $0.11, up from $0.09, extending four consecutive quarterly estimate beats.
- GAAP Q3 earnings fell to $57.6 million from $71 million; year-to-date GAAP earnings down $33 million versus 2025.
- Total debt $6.65 billion, cash $60 million, trailing free cash flow negative $81 million.
Weather Did the Work
Algonquin Power & Utilities (AQN) owns and operates regulated electric, water, and natural gas systems across the U.S., Canada, Bermuda, and Chile, serving roughly 1.27 million customer connections, a business that earns through rate cases, not innovation. That makes weather exposure a material variable. Empire Electric's favorable conditions contributed $20.4 million to Q3 adjusted earnings, exceeding the full $19.1 million year-over-year adjusted gain. New utility rates from CalPeco and Empire Electric added $11.4 million, though CalPeco's figure includes retroactive 2025 recognition. Operating expenses rose $4.4 million from gas safety and maintenance, and a $7.1 million depreciation deferral that boosted Q3 2025 did not recur.
The GAAP Divergence Grows
The gap between adjusted and GAAP metrics has widened over time. Year-to-date GAAP earnings of $145.6 million trail the prior-year period's $178.6 million by $33 million, while year-to-date adjusted earnings improved modestly to $216.9 million from $211.6 million. The GAAP shortfall absorbs $29.7 million in prior-year one-time items and a rate case write-off in Arizona that did not repeat. For a business carrying $6.65 billion in total debt against $60 million in cash and negative free cash flow, the gap between adjusted and GAAP narratives is real, and any DCF model for AQN requires a judgment call on how much of the adjusted improvement to treat as recurring.
| Ticker | Mkt cap | Fwd P/E | 52-wk |
|---|---|---|---|
| AQN | $4.2B | 13.6x | -11.5% |
| FTS | $31.0B | 21.7x | +17.1% |
| TU | $14.3B | 16.9x | -38.4% |
| CWEN | $7.0B | 21.7x | -2.1% |
| BEP | $21.3B | n/a | +0.1% |
| AQN.TO | $6.0B | 13.6x | -10.6% |
The Redomicile and Rate Cases Frame the 2027 Test
Management reaffirmed 2026 adjusted EPS guidance of $0.35 to $0.37 and introduced 2027 guidance of $0.38 to $0.42, while stating no equity issuance is expected through 2027. The completed $126 million sale of the Suralis Chilean water stake advances a focus on North American regulated operations. A U.S. redomicile targeted for the first half of 2027 is expected to add $0.02 to $0.03 in annualized EPS. The Q4 and full-year 2027 test is whether the rate base and redomicile combined sustain the guidance range without weather help. Run the free Algonquin Power & Utilities Corp. deep-dive →
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Frequently Asked Questions
What drove Algonquin Power's Q3 earnings beat?
Empire Electric's favorable weather contributed $20.4 million to adjusted earnings, while the total year-over-year adjusted gain was only $19.1 million. This means favorable weather explained virtually all of the improvement in adjusted EPS.
Why did Algonquin's GAAP earnings fall?
While adjusted EPS rose to $0.11 from $0.09, GAAP earnings fell to $57.6 million from $71 million. Year-to-date GAAP earnings are down $33 million versus 2025, with the decline partly explained by prior-year one-time items and a rate case write-off that did not recur.
What's Algonquin Power's debt and cash position?
The company carries $6.65 billion in total debt against only $60 million in cash, with negative trailing free cash flow of $81 million. Given this leverage, the gap between adjusted and GAAP earnings is material to any valuation analysis.
What's Algonquin's 2027 earnings guidance?
Management introduced 2027 adjusted EPS guidance of $0.38 to $0.42, up from 2026 guidance of $0.35 to $0.37. A planned U.S. redomicile in the first half of 2027 is expected to add $0.02 to $0.03 in annualized EPS.
Is Algonquin planning an equity issuance?
Management stated that no equity issuance is expected through 2027. The company completed a $126 million sale of its Suralis Chilean water stake to focus on North American regulated operations.
Algonquin Power reported Q3 2026 adjusted earnings of $88.1 million—up from $69 million a year ago—while GAAP earnings simultaneously fell to $57.6 million from $71 million. The complication: favorable weather at Empire Electric alone contributed $20.4 million to the adjusted result, a figure that exceeds the entire year-over-year adjusted earnings gain.