Hydro One (H) AI Stock Analysis

• Market Cap: C$29.32B
• Dividend Yield: 2.65%
• Average Volume (3M): 1.13M
• Price to Earnings (P/E): 23.4
• Beta (1Y): 0.34
• Revenue Growth: 8.03%
• EPS Growth: 11.78%
• Country: CA
• Employees: 7,261
• Sector: Utilities
• Sector Strength: 65
• Industry: Regulated Electric
• EPS (TTM): 0.54
• Shares Outstanding: 599,777,160
• 10 Day Avg. Volume: 1,829,520
• 30 Day Avg. Volume: 1,134,991
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): N/A
• P/FCF Ratio: N/A
• 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$51.38
• Price Target Upside: 5.11% Upside
• Rating Consensus: Hold
• Number of Analyst Covering: 8

• Rating: 71 Outperform
• Price Target: C$55.00 ▲(12.52% Upside)

Hydro One's strong financial performance and positive earnings call are the main drivers of its score. While technical indicators show some weakness, the company's strategic projects and recognitions provide a positive outlook. Valuation is moderate, with a reasonable dividend yield.

Positive Factors

Recognition and Awards

Consistent recognition for corporate citizenship and company culture enhances brand reputation and can attract talent and partnerships, supporting sustainable growth.

Strategic Investments

Increased capital expenditures in strategic projects like storm-related asset replacements and broadband initiatives support long-term growth and infrastructure resilience.

Revenue Growth

Consistent revenue growth driven by higher OEB-approved rates and increased energy consumption indicates strong market demand and operational efficiency.

Negative Factors

Increased Costs

Rising interest and tax expenses reduce net income and could pressure margins, affecting profitability and financial health over the long term.

Negative Free Cash Flow

Negative free cash flow indicates challenges in covering capital expenditures, which may constrain future investments and necessitate careful cash management.

High Leverage

Significant leverage could pose financial risks, limiting flexibility and increasing vulnerability to interest rate changes, impacting long-term financial stability.

Hydro One Business Overview & Revenue Model

Company Description

Hydro One Limited, through its subsidiaries, operates as an electricity transmission and distribution company in Ontario. It operates through three segments: Transmission Business, Distribution Business, and Other. The company owns and operates approximately 30,000 circuit kilometers of high-voltage transmission lines and 125,000 circuit kilometers of primary low-voltage distribution network. It serves approximately 1.5 million residential, small business, commercial, and industrial customers. The company also provides telecommunications support services for its transmission and distribution businesses; and information and communications technology services and solutions. Hydro One Limited was incorporated in 2015 and is headquartered in Toronto, Canada.

How the Company Makes Money

Hydro One makes money primarily through regulated electricity transmission and distribution operations. As a regulated utility, its revenue is largely determined by rates set by the Ontario Energy Board (OEB), which reflects the costs of providing service plus an allowed rate of return. The company's revenue streams include transmission tariffs charged to electricity generators and distributors for using its network to transport electricity, and distribution charges to end-users for delivering electricity to homes and businesses. Hydro One also engages in ancillary services and other electricity-related businesses, which complement its core operations. The stability and predictability of its earnings are bolstered by the regulatory framework and its monopoly status in key service areas, making it a reliable income generator.

Hydro One Financial Statement Overview

Summary

Hydro One shows solid financial health with consistent revenue growth and strong profitability margins. The balance sheet is stable but somewhat leveraged, and cash flow generation is strong, though impacted by significant capital expenditures. The company should focus on managing capital spending to improve free cash flow.

Income Statement

Hydro One's income statement shows a steady growth in total revenue over recent years, with a revenue growth rate of 2.85% in the TTM (Trailing-Twelve-Months). The gross profit margin is solid at 32.98%, although slightly decreasing from previous years. Net profit margin remains strong at 13.99%, demonstrating the company's profitability. The EBIT margin of 27.93% and EBITDA margin of 34.78% indicate efficient operational performance. Overall, the company's profitability and growth trends are positive, though slight margin compression warrants monitoring.

Balance Sheet

Hydro One maintains a moderate debt-to-equity ratio of 1.45, reflecting a balanced approach to leveraging. The return on equity (ROE) is a healthy 9.96%, indicating effective use of shareholder funds to generate profits. The equity ratio of 33.05% suggests a stable capital structure, although a higher ratio would be preferable. The balance sheet reflects stability, with consistent equity growth, but the high level of debt could pose risks if not managed carefully.

Cash Flow

The company's cash flow statement shows a decline in free cash flow, which is negative in the TTM period, indicating challenges in generating excess cash after capital expenditures. The operating cash flow to net income ratio is 2.11, showcasing strong cash generation relative to net income. However, the free cash flow to net income ratio is negative due to high capital expenditures. While operating cash flow remains robust, the negative free cash flow signals potential liquidity issues if capital spending continues at the current rate.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	8.76B	8.48B	7.84B	7.78B	7.22B	7.29B
Gross Profit	3.22B	3.03B	2.84B	2.80B	2.53B	2.37B
EBITDA	3.05B	2.89B	2.69B	2.81B	2.52B	2.36B
Net Income	1.26B	1.16B	1.08B	1.05B	965.00M	1.79B
Balance Sheet
Total Assets	37.81B	36.68B	32.85B	31.46B	30.38B	30.29B
Cash, Cash Equivalents and Short-Term Investments	71.00M	716.00M	79.00M	530.00M	540.00M	757.00M
Total Debt	18.15B	17.73B	15.74B	15.19B	14.72B	14.41B
Total Liabilities	25.33B	24.51B	21.09B	20.07B	19.41B	19.67B
Stockholders Equity	12.39B	12.09B	11.68B	11.31B	10.89B	10.53B
Cash Flow
Free Cash Flow	-401.00M	-274.00M	-64.00M	174.00M	78.00M	186.00M
Operating Cash Flow	2.44B	2.53B	2.41B	2.26B	2.15B	2.03B
Investing Cash Flow	-3.39B	-3.13B	-2.69B	-2.07B	-2.06B	-1.98B
Financing Cash Flow	949.00M	1.23B	-172.00M	-197.00M	-303.00M	674.00M

Hydro One Technical Analysis

• Technical Analysis Sentiment: Neutral
• Last Price: 48.88
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:H, the sentiment is Neutral. The current price of 48.88 is below the 20-day moving average (MA) of 49.33, below the 50-day MA of 49.29, and above the 200-day MA of 47.45, indicating a neutral trend. The MACD of -0.28 indicates Positive momentum. The RSI at 44.52 is Neutral, neither overbought nor oversold. The STOCH value of 16.89 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for TSE:H.

Hydro One Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
FTS	75 Outperform	34.21B	19.98	7.53%	3.62%	4.22%	6.63%
H	71 Outperform	C$29.32B	23.37	10.34%	2.65%	8.03%	11.78%
CPX	70 Outperform	10.11B	20.34	8.98%	4.01%	-16.83%	-37.24%
EMA	67 Neutral	19.06B	21.61	7.22%	5.77%	10.65%	14.09%
CU	63 Neutral	7.66B	22.73	7.50%	4.89%	-0.51%	-17.17%
BEP.UN	53 Neutral	22.74B	-25.63	-6.02%	5.94%	20.05%	-54.69%
Sector *	66 Neutral	$17.65B	18.10	5.60%	3.62%	6.62%	11.55%

Hydro One Corporate Events

Hydro One Inc. Announces $1.1 Billion Sustainable Notes Offering

Hydro One Inc., a subsidiary of Hydro One Limited, has announced the pricing of a $1.1 billion offering of Medium Term Notes under its Sustainable Financing Framework. The proceeds from this issuance will be allocated to finance or refinance eligible green projects, although it is not a default event if the allocation does not occur. This move underscores Hydro One’s commitment to sustainable investment, potentially enhancing its industry positioning and offering implications for stakeholders interested in green energy initiatives.

The most recent analyst rating on (TSE:H) stock is a Buy with a C$56.00 price target. To see the full list of analyst forecasts on Hydro One stock, see the TSE:H Stock Forecast page.

Hydro One Announces Leadership Changes Amid CEO’s Temporary Leave

Hydro One Limited announced that its President and CEO, David Lebeter, will take a temporary compassionate care leave, and Harry Taylor has been appointed as Interim President and CEO. Taylor, who joined Hydro One in 2024, will continue his role as EVP, Chief Financial and Regulatory Officer. Additionally, Michael W. Rencheck has been appointed to the Board of Directors, bringing over four decades of experience in the energy industry. These leadership changes are expected to maintain the company’s operational stability and strategic growth during Lebeter’s absence.

The most recent analyst rating on (TSE:H) stock is a Hold with a C$44.00 price target. To see the full list of analyst forecasts on Hydro One stock, see the TSE:H Stock Forecast page.