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1. Company Snapshot

1.a. Company Description

AltaGas Ltd.operates as an energy infrastructure company in North America.The company operates through Utilities and Midstream segments.


The Utilities segment owns and operates rate-regulated natural gas distribution and storage utilities in Maryland, Virginia, Delaware, Pennsylvania, Ohio, and the District of Columbia serving approximately 1.7 million customers.This segment also provides interstate natural gas transportation and storage services.The Midstream segment engages in the natural gas gathering and extraction with 1.2 billion cubic feet per day (Bcf/d) of extraction processing capacity and approximately 1.2 Bcf/d of raw field gas processing capacity; natural gas gathering and extraction business; fractionation and liquids handling business; and natural gas and natural gas liquids marketing activities.


It also engages in LPG exports and distribution, logistics, trucking and rail terminals, and liquid storage businesses.In addition, the company operates gas-fired power generation and distribution assets with a generating capacity of 578 MW of power in California and Colorado.It serves residential, commercial, and industrial customers primarily in the Western Canada Sedimentary Basin.


AltaGas Ltd.was founded in 1994 and is headquartered in Calgary, Canada.

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1.b. Last Insights on ALA

AltaGas Ltd.'s recent performance was driven by strong second-quarter 2025 results, showcasing the company's operational strength. A $200 million hybrid note offering, closed on September 5, 2025, demonstrates access to capital markets. Additionally, the redemption of Series A and Series B preferred shares, totaling $200 million, indicates a deliberate capital structure shake-up. A long-term butane supply agreement with BASF, secured via the Ridley Island Energy Export Facility, commencing in 2027, enhances revenue visibility. Partnerships, such as the LPG export agreement with Pembina Pipeline, further diversify end-markets. RBC Capital Markets' updated estimates reflect the company's growth prospects.

1.c. Company Highlights

2. AltaGas' Q3 2025 Earnings: A Strong Performance with Growth Momentum

AltaGas reported a normalized EBITDA of $268 million in Q3 2025, slightly below the same period last year due to a pension settlement recorded in 2024. Excluding this item, year-over-year normalized EBITDA grew by 18%. The company's operational performance was excellent, with record global export volumes of 133,000 barrels per day. Earnings per share (EPS) came in at $0.04, significantly lower than analyst estimates of $0.782. Revenue growth was robust, driven by strong execution across its integrated value chain.

Publication Date: Nov -03

📋 Highlights
  • Strong Q3 EBITDA Growth: Normalized EBITDA reached $268 million, with 18% YoY growth excluding a 2024 pension settlement impact.
  • Midstream Expansion Projects: Finalized $110 million REEF Optimization One (25,000 BPD propane export capacity) and Dimsdale Phase 1 (6 Bcf gas storage expansion), with $5 billion in 3-year growth project capacity.
  • Midstream Financial Performance: Midstream EBITDA hit $204 million (13% YoY increase), protected by tolling agreements and hedging against commodity volatility.
  • Utilities Capital Allocation: $206 million deployed in Q3, including $121 million for modernization and $33 million for new meter connections, with 51% of 2025 $1.4 billion capex allocated to Utilities.

Segment Performance

The Midstream business delivered a solid quarter, with normalized EBITDA of $204 million, up 13% from the same period last year. The export business was largely protected from commodity price volatility through commercial tolling agreements and an active hedging program. The Utilities business performed well, supported by $121 million in modernization spending and a 5% reduction in O&M costs at WGL.

Growth Projects and Investment Opportunities

AltaGas announced the final investment decision (FID) of three new growth projects, including REEF Optimization One, which will add up to 25,000 barrels a day of propane export capacity. The company has a secured growth project inventory of approximately $5 billion over the next three years. Management highlighted the potential for further expansions, including Opti 2, which will add 60,000 barrels. The company's growth prospects are supported by a strong backlog of projects and a robust pipeline of new opportunities.

Valuation and Outlook

AltaGas trades at a P/E ratio of 15.41 and an EV/EBITDA multiple of 11.75. The company's dividend yield stands at 3.02%. Analysts estimate revenue growth of 4.8% next year. With a strong track record of execution and a growing project backlog, AltaGas is well-positioned to deliver long-term value to shareholders. The company's focus on low-risk infrastructure and stable earnings streams supports its valuation.

Balance Sheet and Leverage

AltaGas' balance sheet remains strong, with continued deleveraging expanding its investment capacity. The company expects to end the year with debt-to-EBITDA at or below 4.65x, assuming the closure of the MVP sale. Management highlighted the potential for further growth, with a focus on midstream projects and utility investments. The company's financial flexibility is supported by its cash flows and access to capital markets.

3. NewsRoom

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AltaGas' (TSE:ALA) Dividend Will Be CA$0.315

Dec -02

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AltaGas Boosts Common Share Dividend by 6%, Releases 2026 Guidance

Dec -02

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ALTAGAS ANNOUNCES A SIX PERCENT DIVIDEND INCREASE, 2026 GUIDANCE AND UPDATED STRATEGIC PRIORITIES

Dec -02

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ALTAGAS ACTIVATES CONTINGENCY PLAN TO MAINTAIN UNINTERRUPTED RIPET EXPORT OPERATIONS AMID LABOUR DISRUPTION

Nov -25

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ALTAGAS CLOSES $500 MILLION MEDIUM TERM NOTE OFFERING

Nov -10

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Gas Liquids Engineering Completes Issued For Construction Scope for the Ridley Island Energy Export Facility

Nov -10

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Should AltaGas’ (TSX:ALA) Accelerated Deleveraging and Outlook Upgrade Prompt a Strategic Rethink for Investors?

Nov -08

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ALTAGAS ANNOUNCES CLOSING OF $460 MILLION EQUITY FINANCING WITH POSITIVE CREDIT RATING UPDATES

Nov -07

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4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (4.61%)

6. Segments

Midstream

Expected Growth: 5%

AltaGas Ltd.'s Midstream segment growth is driven by increasing demand for natural gas processing and transportation services, expansion of existing facilities, and strategic acquisitions. Additionally, the company's focus on fee-based contracts and diversified customer base provide a stable source of revenue, supporting a 5% growth rate.

Utilities

Expected Growth: 4%

AltaGas Ltd.'s Utilities segment growth is driven by increasing demand for clean energy, strategic acquisitions, and investments in infrastructure upgrades. Additionally, favorable regulatory environments and long-term contracts with customers contribute to the segment's growth. Furthermore, the company's focus on renewable energy sources, such as wind and solar power, supports its growth trajectory.

Corporate/Other

Expected Growth: 3%

AltaGas Ltd.'s Corporate/Other segment growth of 3% is driven by increased investments in renewable energy projects, expansion of energy storage capabilities, and strategic acquisitions. Additionally, the company's focus on cost optimization and operational efficiencies has contributed to improved profitability.

7. Detailed Products

Natural Gas

AltaGas Ltd. is a leading provider of natural gas, offering a reliable and efficient energy source for residential, commercial, and industrial customers.

Electricity

AltaGas Ltd. generates and distributes electricity to meet the growing demand for clean and reliable power.

Renewable Energy

AltaGas Ltd. develops and operates renewable energy projects, including wind, solar, and hydroelectric power facilities.

Energy Storage

AltaGas Ltd. offers energy storage solutions to help customers manage energy usage and reduce peak demand.

LNG and Propane

AltaGas Ltd. supplies liquefied natural gas (LNG) and propane for transportation, industrial, and residential uses.

Energy Services

AltaGas Ltd. provides energy management services, including energy efficiency solutions and demand response programs.

8. AltaGas Ltd.'s Porter Forces

Forces Ranking

Threat Of Substitutes

AltaGas Ltd. operates in the energy sector, where substitutes are limited. However, the increasing adoption of renewable energy sources and energy-efficient technologies poses a moderate threat to the company's operations.

Bargaining Power Of Customers

AltaGas Ltd. serves a diverse customer base, including residential, commercial, and industrial customers. The bargaining power of customers is low due to the lack of concentration in the customer base.

Bargaining Power Of Suppliers

AltaGas Ltd. relies on a diverse range of suppliers for its operations, including pipeline operators, transportation providers, and equipment suppliers. The bargaining power of suppliers is moderate due to the availability of alternative suppliers.

Threat Of New Entrants

The energy sector is characterized by high barriers to entry, including significant capital requirements, regulatory hurdles, and complexity of operations. The threat of new entrants is low for AltaGas Ltd.

Intensity Of Rivalry

The energy sector is highly competitive, with numerous players competing for market share. AltaGas Ltd. faces intense rivalry from established players, which can lead to pricing pressures and reduced market share.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 55.19%
Debt Cost 5.42%
Equity Weight 44.81%
Equity Cost 10.02%
WACC 7.48%
Leverage 123.18%

11. Quality Control: AltaGas Ltd. passed 3 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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New Jersey Resources

A-Score: 6.7/10

Value: 6.7

Growth: 4.3

Quality: 5.3

Yield: 8.0

Momentum: 6.0

Volatility: 10.0

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AltaGas

A-Score: 6.7/10

Value: 4.7

Growth: 6.1

Quality: 3.6

Yield: 7.0

Momentum: 8.5

Volatility: 10.0

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ONE Gas

A-Score: 6.3/10

Value: 5.9

Growth: 4.4

Quality: 4.7

Yield: 6.0

Momentum: 7.0

Volatility: 10.0

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NiSource

A-Score: 6.3/10

Value: 5.0

Growth: 3.3

Quality: 4.7

Yield: 6.0

Momentum: 8.5

Volatility: 10.0

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Atmos Energy

A-Score: 6.1/10

Value: 4.3

Growth: 4.9

Quality: 5.4

Yield: 4.0

Momentum: 8.0

Volatility: 10.0

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Southwest Gas Holdings

A-Score: 5.9/10

Value: 4.2

Growth: 5.2

Quality: 3.5

Yield: 7.0

Momentum: 6.0

Volatility: 9.7

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

42.23$

Current Price

42.23$

Potential

-0.00%

Expected Cash-Flows