Should AltaGas's (TSX:ALA) Full Preferred Share Redemption Alter Investors’ View on Capital Allocation?

• AltaGas Ltd. has announced the redemption of all its outstanding Cumulative Redeemable Series A and Series B Preferred Shares, totaling a buyback of 8,000,000 shares for a combined redemption cost of $200 million, with a final dividend to be paid in late September 2025.
• This action stands to reshape AltaGas's future capital structure and could alter the company's approach to balancing equity, debt, and investor returns.
• We’ll look at how this comprehensive preferred share redemption could influence AltaGas’s investment outlook and capital allocation priorities.

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AltaGas Investment Narrative Recap

To own AltaGas, you need confidence in the company’s ability to grow its regulated utility base and capitalize on expanding LPG export demand, while managing capital costs and policy risks. AltaGas’s decision to redeem its outstanding Series A and B preferred shares for CA$200 million does not materially shift the company’s most important near-term catalyst, expansion in Asian LPG exports, nor does it directly address the primary risk tied to regulatory challenges and decarbonization pressures in its core utility business.

Among recent announcements, the new long-term tolling agreement with Pembina for additional Ridley Island export capacity stands out, tying directly into AltaGas’s LPG export expansion catalyst. Even as capital structure changes occur, ongoing investment in high-margin export infrastructure remains a key near-term driver, underpinning the company’s revenue growth outlook and export diversification themes.

But on the risk side, investors should be aware that, in contrast, policy moves aimed at gas decarbonization have the potential to...

Read the full narrative on AltaGas (it's free!)

AltaGas' outlook anticipates CA$14.7 billion in revenue and CA$756.5 million in earnings by 2028. This is based on an expected 4.8% annual revenue growth rate but reflects a decrease in earnings of CA$22.5 million from the current CA$779.0 million.

Uncover how AltaGas' forecasts yield a CA$43.91 fair value, a 5% upside to its current price.

Exploring Other Perspectives

Five fair value estimates from the Simply Wall St Community range widely, from CA$28.17 to CA$154.34 per share. While views differ, keep in mind that many see AltaGas’s exposure to decarbonization risks as a critical factor in shaping long-term returns.

Explore 5 other fair value estimates on AltaGas - why the stock might be worth over 3x more than the current price!

Build Your Own AltaGas Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your AltaGas research is our analysis highlighting 3 key rewards and 3 important warning signs that could impact your investment decision.
• Our free AltaGas research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate AltaGas' overall financial health at a glance.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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