Canadian Utilities A (CU) AI Stock Analysis

• Market Cap: C$7.85B
• Dividend Yield: 4.75%
• Average Volume (3M): 458.88K
• Price to Earnings (P/E): 23.3
• Beta (1Y): 0.43
• Revenue Growth: -0.51%
• EPS Growth: -17.17%
• Country: CA
• Employees: 9,084
• Sector: Utilities
• Sector Strength: 65
• Industry: Diversified Utilities
• EPS (TTM): 0.38
• Shares Outstanding: 205,244,030
• 10 Day Avg. Volume: 293,020
• 30 Day Avg. Volume: 458,878
• PEG Ratio: -0.54
• Price to Book (P/B): 1.37
• Price to Sales (P/S): 2.53
• P/FCF Ratio: 29.37
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: C$41.00
• Price Target Upside: 6.72% Upside
• Rating Consensus: Hold
• Number of Analyst Covering: 3

• Rating: 66 Neutral
• Price Target: C$41.00 ▲(6.72% Upside)

Canadian Utilities A's overall stock score is driven by strong financial performance and positive earnings call insights, despite technical indicators showing bearish trends. The valuation is attractive with a high dividend yield, but high leverage and regulatory challenges pose risks.

Positive Factors

Strong Earnings Growth

The increase in adjusted earnings reflects the company's ability to maintain profitability despite external challenges, indicating a resilient business model.

Yellowhead Pipeline Progress

The progress on the Yellowhead pipeline project underscores Canadian Utilities' strategic investments in infrastructure, promising long-term economic benefits and growth.

Cash Flow Generation

Strong cash flow generation enhances financial flexibility, allowing the company to fund projects and manage debt effectively, supporting sustainable growth.

Negative Factors

High Leverage

High leverage can increase financial risk, potentially limiting the company's ability to invest in new projects or weather economic downturns.

Regulatory Challenges

Ongoing regulatory challenges could impact future earnings and operational flexibility, posing risks to the company's strategic initiatives.

Declining Revenue Growth

Negative revenue growth suggests potential difficulties in expanding market share or demand, which could affect long-term profitability and competitiveness.

Canadian Utilities A Business Overview & Revenue Model

Company Description

Canadian Utilities Limited and its subsidiaries engage in the electricity, natural gas, and retail energy businesses worldwide. It operates through Utilities, Energy Infrastructure, and Corporate & Other segments. The Utilities segment provides regulated electricity transmission and distribution services in northern and central east Alberta, the Yukon, and the Northwest Territories; and integrated natural gas transmission and distribution services in Alberta, the Lloydminster area of Saskatchewan, and Western Australia. It owns and operates approximately 9,000 kilometers of natural gas pipelines, 16 compressor sites, approximately 3,700 receipt and delivery points, and a salt cavern storage peaking facility located near Fort Saskatchewan, Alberta in Canada. The Energy Infrastructure segment provides electricity generation, natural gas storage, industrial water, and related infrastructure development solutions in Alberta, the Yukon, the Northwest Territories, Australia, Mexico, and Chile. The Corporate & Other segment retails electricity and natural gas business in Alberta. The company was incorporated in 1927 and is headquartered in Calgary, Canada. Canadian Utilities Limited is a subsidiary of ATCO Ltd.

How the Company Makes Money

Canadian Utilities makes money through a diverse set of revenue streams primarily tied to its regulated and unregulated energy businesses. In the electricity sector, the company generates revenue from the generation, transmission, and distribution of electricity to residential, commercial, and industrial customers in regulated markets, ensuring stable and predictable cash flows. The pipelines and liquids segment contributes to its earnings by transporting and distributing natural gas, with revenues coming from regulated tariffs and contracts. Additionally, Canadian Utilities earns income from its retail energy operations by selling electricity and natural gas directly to end customers. The company's revenue model is bolstered by long-term contracts and regulatory frameworks that provide steady income streams, while its international operations and investments in infrastructure development and industrial water solutions offer opportunities for growth and diversification.

Canadian Utilities A Financial Statement Overview

Summary

Canadian Utilities A demonstrates strong profitability and cash flow generation, though it faces challenges with declining revenue growth and high leverage. The company maintains healthy margins and cash flow ratios, but the high debt levels require careful management to mitigate financial risks.

Income Statement

The company shows strong profitability with a consistent gross profit margin above 60% and a net profit margin around 14% in TTM. However, revenue growth has been negative in recent periods, indicating a potential challenge in expanding sales. EBIT and EBITDA margins remain healthy, suggesting efficient operations despite revenue declines.

Balance Sheet

The balance sheet reflects a high debt-to-equity ratio of 1.63 in TTM, indicating significant leverage which could pose risks if not managed properly. Return on equity is moderate at 7.5%, showing decent profitability relative to shareholder equity. The equity ratio is stable, reflecting a balanced asset structure.

Cash Flow

Cash flow analysis shows positive trends with a free cash flow growth rate of 16.1% in TTM, indicating improved cash generation. The operating cash flow to net income ratio is strong at 2.43, suggesting efficient cash conversion. However, the free cash flow to net income ratio is relatively low at 0.14, indicating limited free cash flow relative to net income.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	3.72B	3.74B	3.80B	4.05B	3.52B	3.23B
Gross Profit	1.50B	1.44B	1.45B	1.72B	1.36B	1.32B
EBITDA	1.82B	1.76B	2.03B	1.80B	1.53B	1.55B
Net Income	523.00M	480.00M	707.00M	632.00M	393.00M	427.00M
Balance Sheet
Total Assets	23.88B	23.79B	23.16B	21.97B	21.07B	20.30B
Cash, Cash Equivalents and Short-Term Investments	401.00M	332.00M	356.00M	698.00M	746.00M	776.00M
Total Debt	11.36B	11.11B	10.59B	9.59B	9.57B	9.11B
Total Liabilities	16.69B	16.67B	16.00B	14.91B	14.25B	13.49B
Stockholders Equity	6.98B	6.91B	6.94B	6.88B	6.63B	6.62B
Cash Flow
Free Cash Flow	288.00M	322.00M	-12.00M	771.00M	497.00M	741.00M
Operating Cash Flow	2.02B	1.92B	1.33B	2.14B	1.72B	1.63B
Investing Cash Flow	-1.55B	-1.41B	-2.25B	-1.26B	-1.26B	-905.00M
Financing Cash Flow	-428.00M	-790.00M	434.00M	-932.00M	-478.00M	-924.00M

Canadian Utilities A Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 38.42
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:CU, the sentiment is Positive. The current price of 38.42 is above the 20-day moving average (MA) of 37.93, above the 50-day MA of 38.12, and above the 200-day MA of 35.99, indicating a bullish trend. The MACD of -0.03 indicates Negative momentum. The RSI at 59.74 is Neutral, neither overbought nor oversold. The STOCH value of 89.27 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for TSE:CU.

Canadian Utilities A Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
FTS	75 Outperform	34.61B	20.21	7.53%	3.56%	4.22%	6.63%
H	71 Outperform	29.51B	23.52	10.14%	2.63%	8.03%	11.78%
ACO.X	68 Neutral	5.55B	12.55	9.28%	4.04%	7.64%	14.22%
ACO.Y	68 Neutral	5.55B	13.18	9.28%	3.89%	7.64%	14.22%
EMA	67 Neutral	19.44B	22.04	7.22%	5.62%	10.65%	14.09%
CU	66 Neutral	C$7.85B	23.30	7.52%	4.75%	-0.51%	-17.17%
Sector *	66 Neutral	$17.65B	18.10	5.60%	3.62%	6.62%	11.55%