Algonquin Power raises cash

  On September 4,2014 Algonquin Power announced a secondary offering of 16.86 million  shares at $8.90 a share.There was also an overallotment of about 250,000 shares.This blog considers that $8.90 is a reasonable price for Algonguin Power to raise cash.The money was raised in 12 days-a good sign that demand is strong for Algonquin shares.This will increase the number of shares from 207 million to 224 million.Ordinarily this would dilute earnings and drive the price of shares down but Algonquin had a good first half and has new operations that will increase earnings for the second half.Consequently even with 17 million new shares , earnings per share will rise.Investors know this and have bid the price up to almost $9.00.It is likely to soon surpass the 52 week high of $9.15.
      Another acquisition
  Algonquin also acquired in Sepember another American utility in a kind of auction from Carlyle Infrastructure for US $327 million.The sale is conditional on approvals from American regulators.It is expected to close in the second half of 2015 and will not affect the balance sheet until then.Yahoo Finance points out that this is the eighth American utility acquired by Algonquin since 2010.It has picked up utilities in Georgia, Arizona and Arkansas along with these new Carlyle utilities in California and Montana.Most have gotten recent rate increases that have increased revenues and earnings.Earnings went from $.16 per share in the first half of 2013 up to $.22 in 2014.This with  new earnings coming onstream from Cornwall and Bakersfield, California in the second half  of 2014 .An earlier blog predicted earnings of $.47 to $.50 per share for 2014.This still seems reasonable with the new shares as net earnings seem on track to hit $100 to $120 million for the year;  they reported $51 million for the first half and new earnings about to be delivered.The question is whether the new properties can deliver as the existing properties did in the first half.And the bigger question is can they keep getting generous rate increases from American regulators like they did in early 2014.
         Forecast for 2015
  This blog sees an increase in earnings for 2014 to $.47 to $.50 per share from $.34;this is an increase of more than 40% and should send the P/E ratio down to 21 or 22 from the present 26.This blog sees little resistance at it's 52 week high of $9.15 and it may head towards $10.00 per share by late November.But 2015 may see small or no rate increases from American regulated utilities and earnings growth will stall.Algonquin has a nice portfolio of assets but more future purchases must come from northern properties.It appears that Algonquin is better at buying distressed properties than building them.