Atlantic Power Corp (AT) Earnings: Can It Get Any Worse? – Duke Energy Corp (DUK), The Southern Company (SO)

Source: Yahoo! Finance

Atlantic takes the cake on capex — and it should, considering its small-cap growth-by-acquisition strategy. Second prize goes to Duke Energy, which expects to spend around $12 billion to retire 6,800 MW of coal generation. Close on its heels, Southern will spend $16.5 billion in the next two years alone to kick its own coal habit, and recently became the first utility in more than 30 years to be approved to build new nuclear facilities. FirstEnergy expects to squeak by EPA regulations with around $1 billion in compliance-related costs, while Exelon’s nuclear-centric generation gives it clean freedom from current costly upgrades.

Is Atlantic back in the bull pen?
In the last 12 months, the S&P 500 gained 11.3%, the Dow Jones U.S. Utilties Index bumped up 7.7% … and Atlantic’s stock plummeted 50%. Ouch.

Source: ^SPX data by YCharts

Over 30% of Atlantic’s demise occurred in the last five days alone, and the company’s current dividend yield has concurrently bumped up to a whopping 15.7% for the time being. But with above-average debt, lackluster margins, shrinking distributable cash flow, and an acquisition strategy that hasn’t been working out, I’d think twice about pulling Atlantic stock out of the bargain bin.

Rain check
Now that it’s done away with its disaster-sized dividend, I’ll be watching Atlantic closely over the next year. If it renews crucial purchasing power agreements, if its recent renewable energy acquisitions pay off, if it pulls net income back into the black, and if its valuation remains reasonable throughout, I’ll consider Atlantic’s offerings again.

The article Atlantic Power Earnings: Can It Get Any Worse? originally appeared on Fool.com and is written by Justin Loiseau.

Fool contributor Justin Loiseau has no position in any stocks mentioned, but he does use electricity. You can follow him on Twitter, @TMFJLo, and on Motley Fool CAPS, @TMFJLo.The Motley Fool recommends Exelon and Southern Company.

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