Avangrid, Inc. (AGR) Bundle
Understanding Avangrid, Inc. (AGR) Revenue Streams
Understanding Avangrid, Inc.’s Revenue Streams
The financial performance of Avangrid, Inc. is significantly influenced by its diverse revenue streams. The company primarily generates revenue through its Networks and Renewables segments. Below is a detailed breakdown of these revenue sources.
Breakdown of Primary Revenue Sources
| Segment | Revenue (Millions) | Percentage of Total Revenue |
|---|---|---|
| Networks | $5,279 | 82.2% |
| Renewables | $1,147 | 17.8% |
| Total Revenue | $6,423 | 100% |
Year-over-Year Revenue Growth Rate
For the nine months ended September 30, 2024, Avangrid reported an increase in operating revenues of 6.6% compared to the same period in 2023, rising from $6,027 million to $6,423 million.
Contribution of Different Business Segments to Overall Revenue
The Networks segment contributed approximately 82.2% of the total revenue, while the Renewables segment contributed 17.8%.
Analysis of Significant Changes in Revenue Streams
In the Networks segment, operating revenues increased by $343 million, primarily due to rate increases in New York effective October 12, 2023. In contrast, the Renewables segment saw an increase of $55 million, attributed to favorable thermal and power trading conditions.
Year-over-Year Revenue Comparison
| Period | Networks Revenue (Millions) | Renewables Revenue (Millions) | Total Revenue (Millions) |
|---|---|---|---|
| 9M 2023 | $4,936 | $1,092 | $6,027 |
| 9M 2024 | $5,279 | $1,147 | $6,423 |
| Increase/Decrease | $343 | $55 | $396 |
The increase in Networks revenue was driven by a combination of rate adjustments and regulatory mechanisms. The Renewables segment's growth was influenced by market conditions leading to higher merchant prices and favorable changes in energy derivative transactions.
Overall, the financial health of Avangrid, Inc. appears stable, with consistent revenue growth across its primary segments, reflecting effective management and favorable market conditions.
A Deep Dive into Avangrid, Inc. (AGR) Profitability
A Deep Dive into Avangrid, Inc. Profitability
Gross Profit, Operating Profit, and Net Profit Margins
For the three months ended September 30, 2024, the company reported:
- Operating Revenues: $2,083 million
- Net Income: $205 million
- Adjusted Net Income: $211 million
For the nine months ended September 30, 2024, the figures were:
- Operating Revenues: $6,423 million
- Net Income: $725 million
- Adjusted Net Income: $741 million
Trends in Profitability Over Time
Comparing the three months ended September 30, 2024 to the same period in 2023:
- Net Income increased by $146 million from $59 million in 2023 to $205 million in 2024.
- Adjusted Net Income rose by $106 million from $105 million to $211 million.
For the nine months ended September 30, 2024 compared to 2023:
- Net Income increased by $336 million from $389 million to $725 million.
- Adjusted Net Income rose by $307 million from $434 million to $741 million.
Comparison of Profitability Ratios with Industry Averages
| Metric | Avangrid 2024 | Industry Average |
|---|---|---|
| Gross Profit Margin | 35.5% | 30.0% |
| Operating Profit Margin | 12.9% | 10.5% |
| Net Profit Margin | 10.2% | 8.0% |
Analysis of Operational Efficiency
For the nine months ended September 30, 2024, the company reported:
- Operating Income: $862 million
- Depreciation and Amortization: $935 million
- Interest Expense: $379 million
In terms of operational costs:
- Operations and Maintenance Expenses: $2,477 million, up from $2,319 million in 2023.
- Purchased Power, Natural Gas, and Fuel Used: $1,610 million, down from $1,844 million in 2023.
Overall, the company's cost management strategies have led to a decrease in purchased power expenses, contributing positively to gross margin trends.
Debt vs. Equity: How Avangrid, Inc. (AGR) Finances Its Growth
Debt vs. Equity: How Avangrid, Inc. Finances Its Growth
As of September 30, 2024, Avangrid, Inc. reported a total debt of $10,768 million, which includes both short-term and long-term obligations. The breakdown is as follows:
- Short-term debt (commercial paper): $1,928 million
- Long-term debt: $8,840 million
The company’s debt-to-equity ratio stands at 0.52, calculated from total liabilities of $26,043 million and total equity of $20,690 million as of the same date. This ratio is below the industry average of approximately 1.0, indicating a more conservative approach to leveraging its capital structure.
Recent Debt Issuances and Credit Ratings
In recent months, Avangrid has engaged in significant debt issuance activities. Notably, it issued $1,200 million in non-current debt with affiliates in June 2024 and $655 million in other non-current debt. The interest expense for the nine months ending September 30, 2024, was $379 million, a substantial increase from $301 million for the same period in 2023, primarily due to increased outstanding balances on commercial paper and other loans.
Moody's and S&P have rated Avangrid's credit as investment grade, reflecting a stable outlook despite the rising interest expenses associated with its increased debt levels.
Balancing Debt Financing and Equity Funding
Avangrid employs a balanced approach between debt financing and equity funding to finance its growth initiatives. For the nine months ended September 30, 2024, the company reported capital expenditures of $2,854 million, which were financed through both operational cash flows and debt issuances. In addition, the company maintains a robust liquidity position with cash and cash equivalents of $148 million as of September 30, 2024.
The following table summarizes Avangrid's capital structure and financing activities:
| Category | Amount (in millions) |
|---|---|
| Short-term Debt | $1,928 |
| Long-term Debt | $8,840 |
| Total Debt | $10,768 |
| Total Equity | $20,690 |
| Debt-to-Equity Ratio | 0.52 |
| Interest Expense (9M 2024) | $379 |
| Capital Expenditures (9M 2024) | $2,854 |
| Cash and Cash Equivalents | $148 |
Assessing Avangrid, Inc. (AGR) Liquidity
Assessing Avangrid, Inc.'s Liquidity
Current Ratio: As of September 30, 2024, the current ratio is calculated as follows:
| Current Assets (in millions) | Current Liabilities (in millions) | Current Ratio |
|---|---|---|
| $2,241 | $1,165 | 1.92 |
Quick Ratio: The quick ratio, which excludes inventory from current assets, is as follows:
| Quick Assets (in millions) | Current Liabilities (in millions) | Quick Ratio |
|---|---|---|
| $1,900 | $1,165 | 1.63 |
Working Capital Trends: The working capital for the nine months ended September 30, 2024, is:
| Period | Current Assets (in millions) | Current Liabilities (in millions) | Working Capital (in millions) |
|---|---|---|---|
| September 30, 2024 | $2,241 | $1,165 | $1,076 |
| September 30, 2023 | $1,963 | $1,150 | $813 |
Cash Flow Overview:
| Cash Flow Type | 2024 (in millions) | 2023 (in millions) |
|---|---|---|
| Operating Cash Flow | $940 | $757 |
| Investing Cash Flow | ($3,082) | ($2,024) |
| Financing Cash Flow | $2,199 | $1,279 |
Potential Liquidity Concerns: The company has a commercial paper outstanding balance of $1,928 million as of September 30, 2024. The weighted-average interest rate on commercial paper is 5.10%. The total debt, including current liabilities, is $26,043 million, and total assets amount to $46,733 million.
Liquidity Strengths: The company has access to a credit facility of $3,575 million and a balance of cash and cash equivalents at $148 million as of September 30, 2024.
Overall, the liquidity metrics indicate a solid position, with a current ratio above 1.5 and a quick ratio above 1.0, suggesting the company can meet its short-term obligations comfortably.
Is Avangrid, Inc. (AGR) Overvalued or Undervalued?
Valuation Analysis
In assessing whether the company is overvalued or undervalued, key financial ratios such as price-to-earnings (P/E), price-to-book (P/B), and enterprise value-to-EBITDA (EV/EBITDA) are critical. As of September 30, 2024, the following ratios are observed:
- P/E Ratio: 20.7
- P/B Ratio: 1.5
- EV/EBITDA Ratio: 14.2
The stock price has shown notable trends over the last 12 months. The stock price at the beginning of 2024 was approximately $45.00, and as of September 30, 2024, it has risen to about $51.00, representing an increase of approximately 13.3%.
Dividend Yield and Payout Ratios
The company declared a quarterly dividend of $0.44 per share in September 2024. The annualized dividend yield based on the current stock price of $51.00 is approximately 3.45%. The payout ratio for the last nine months is calculated as follows:
- Dividend Payout Ratio: 47% (calculated from dividends declared of $510 million against net income of $1.1 billion).
Analyst Consensus on Stock Valuation
Analyst ratings suggest a consensus of Hold for the stock, with the following breakdown:
- Buy: 8 analysts
- Hold: 12 analysts
- Sell: 2 analysts
Key Financial Metrics Summary
| Metric | Value |
|---|---|
| P/E Ratio | 20.7 |
| P/B Ratio | 1.5 |
| EV/EBITDA Ratio | 14.2 |
| Stock Price (Sept 30, 2024) | $51.00 |
| Dividend Per Share | $0.44 |
| Annualized Dividend Yield | 3.45% |
| Payout Ratio | 47% |
| Analyst Consensus | Hold |
The valuation metrics indicate a mixed perspective on the company’s financial health and market position, warranting careful consideration by investors.
Key Risks Facing Avangrid, Inc. (AGR)
Key Risks Facing Avangrid, Inc.
Internal and external risks impacting the company's financial health include:
- Industry Competition: The energy sector faces intense competition, particularly in renewable energy, with numerous players vying for market share.
- Regulatory Changes: The company is subject to complex energy regulations at federal, state, and local levels, which can significantly impact operations. As of September 30, 2024, total regulatory assets amounted to approximately $914 million.
- Market Conditions: Fluctuations in energy prices and demand can affect revenues. For instance, operating revenues increased from $1,974 million for the three months ended September 30, 2023, to $2,083 million for the same period in 2024.
Operational, Financial, or Strategic Risks
Recent earnings reports highlight several risks:
- Operational Risks: Increased operational costs due to inflation and supply chain disruptions have been noted. For the nine months ended September 30, 2024, operating expenses were $5,561 million.
- Financial Risks: Interest expenses have risen, with net interest expense for the three months ended September 30, 2024, at $132 million compared to $107 million in the prior year.
- Strategic Risks: The ongoing geopolitical instability may impact operations and financial performance. The total net amount of regulatory liabilities as of September 30, 2024, was approximately $1,147 million.
Mitigation Strategies
The company has implemented several strategies to address these risks:
- Regulatory Engagement: Actively participating in the regulatory process to influence outcomes that impact business operations.
- Cost Management Initiatives: Implementing measures to control operational costs and improve efficiency, evidenced by a decrease in purchased power, natural gas, and fuel used from $482 million in Q3 2023 to $457 million in Q3 2024.
- Diversification of Energy Sources: Expanding renewable energy projects to mitigate reliance on traditional energy sources and reduce exposure to market volatility.
| Risk Factor | Description | Financial Impact |
|---|---|---|
| Regulatory Changes | Subject to complex energy regulations | Total regulatory assets: $914 million |
| Operational Costs | Increased costs due to inflation and supply chain issues | Total operating expenses: $5,561 million |
| Interest Rates | Rising interest expenses | Net interest expense: $132 million |
| Geopolitical Risk | Instability affecting market conditions | Total regulatory liabilities: $1,147 million |
Future Growth Prospects for Avangrid, Inc. (AGR)
Future Growth Prospects for Avangrid, Inc.
Analysis of Key Growth Drivers
Avangrid, Inc. has several key growth drivers that are expected to enhance its market position. These include:
- Product Innovations: The company is focusing on renewable energy innovations, particularly in wind and solar technologies.
- Market Expansions: Avangrid is actively pursuing opportunities in new geographic markets, particularly in renewable energy sectors across the United States.
- Acquisitions: Strategic acquisitions are being considered to expand their renewable energy portfolio and enhance their service offerings.
Future Revenue Growth Projections and Earnings Estimates
Avangrid's revenue for the nine months ended September 30, 2024, was $6,423 million, compared to $6,027 million for the same period in 2023, reflecting an increase of 6.5%. The projected adjusted net income for 2024 is expected to be $741 million, up from $434 million in 2023.
Strategic Initiatives or Partnerships
Avangrid has entered into several strategic partnerships aimed at enhancing its growth trajectory. Notably:
- The New England Clean Energy Connect (NECEC) project, a $1.5 billion investment, aims to increase transmission capacity and support renewable energy delivery.
- Collaborations with Hydro-Québec to facilitate cross-border renewable energy transmission.
Competitive Advantages
Avangrid's competitive advantages include:
- Established Market Presence: With operations in several states, the company has a robust infrastructure and customer base.
- Regulatory Expertise: The company has a strong understanding of regulatory environments, which aids in navigating complex energy laws.
- Focus on Sustainability: Avangrid's commitment to renewable energy aligns with increasing market demand for sustainable practices, positioning it favorably in the energy sector.
| Metric | 2024 | 2023 | Change (%) |
|---|---|---|---|
| Operating Revenues | $6,423 million | $6,027 million | 6.5% |
| Adjusted Net Income | $741 million | $434 million | 70.5% |
| Capital Expenditures | $2,854 million | $2,078 million | 37.3% |
Avangrid's strategic focus on the renewable sector and its financial performance indicate strong potential for future growth, supported by its ongoing initiatives and competitive positioning in the market.
Avangrid, Inc. (AGR) DCF Excel Template
5-Year Financial Model
40+ Charts & Metrics
DCF & Multiple Valuation
Free Email Support
Article updated on 8 Nov 2024
Resources:
- Avangrid, Inc. (AGR) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Avangrid, Inc. (AGR)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Avangrid, Inc. (AGR)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.