AltaGas' 2025 Q2 Earnings: A Blueprint for Energy Infrastructure's Next Big Move

AltaGas Ltd. (ALG) has delivered a Q2 2025 report that screams "buy the dip" for investors seeking stability and growth in the energy infrastructure sector. With normalized EBITDA surging 16% year-over-year to $342 million and normalized EPS doubling to $0.27, this utility and midstream juggernaut is proving it can thrive in a volatile market. Let's break down why this stock is a sleeper hit for those who want to play defense while still earning outsized returns.

Midstream: A Cash Cow in a Golden Age

The Midstream segment's 23% EBITDA jump to $215 million isn't just a number—it's a masterclass in leveraging global energy demand. The Montney region's Townsend, Pipestone I, and Blair Creek facilities are firing on all cylinders, with gas processing volumes up 12% year-over-year. Meanwhile, the Mountain Valley Pipeline (MVP) is a cash machine, supported by 20-year investment-grade contracts that insulate it from short-term market swings.

But the real fireworks are in the long-term tolling agreements. Keyera Corp. and Pembina Pipeline are doubling down on AltaGas' export capacity, signing 15- and 10-year deals that lock in future throughput. This isn't just volume growth—it's a moat. With REEF's jetty construction at 60% completion and Pipestone II on track for a late 2025 launch, AltaGas is building a platform that scales with global LNG demand.

Utilities: The Quiet Storm of Resilience

While Midstream grabs headlines, the Utilities segment is the unsung hero. EBITDA rose 10% to $134 million, driven by modernization investments and colder-than-expected Michigan weather. This is the kind of predictable, inflation-protected cash flow that makes utility stocks a refuge in uncertain times.

The Keweenaw Connector Pipeline—a $120 million, 30-mile project with a 2027 in-service date—shows AltaGas isn't resting on its laurels. By integrating local infrastructure with its national network, the company is creating a flywheel effect: stronger grid reliability leads to rate base growth, which funds further upgrades.

Leverage? What Leverage?

With adjusted net debt to normalized EBITDA at 4.6x—well below its 4.65x target—AltaGas is cleaning up its balance sheet while peers struggle. This is a company that's self-funding its $1.4 billion 2025 capital program, allocating 51% to Utilities and 45% to Midstream. That discipline is music to the ears of value investors.

The Big Picture: Why This Is a Buy

AltaGas is playing offense and defense. On offense, it's securing long-term contracts with industry giants and expanding its export footprint. On defense, it's maintaining a fortress balance sheet and a 2.2% dividend yield that's backed by a 20-year growth track record.

The market isn't pricing in the full potential of REEF, which could become North America's largest propane export terminal by 2030. At a current P/E of 14x (vs. the sector average of 18x), AltaGas is trading like a utility and growing like a midstream play.

Final Call: Time to Take the Bull by the Horns

For investors who want to ride the energy transition without the volatility of oil and gas producers, AltaGas is a no-brainer. Its dual focus on regulated utilities and fee-based midstream operations creates a hybrid model that's immune to commodity price swings.

Buy AltaGas now, and hold through the cycle. With 2025 guidance intact and a $2.10–$2.30 EPS range, the stock has 20% upside to meet its $65 price target. This isn't just a “buy”—it's a “hold for a decade” play in a sector where patience pays off.

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