ATCO Ltd Cl I NV (ACO.X) AI Stock Analysis

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ATCO Ltd Cl I NV

(TSX:ACO.X)

75Outperform

ATCO Ltd.'s strong financial performance and strategic expansions underscore its solid market positioning. The reasonable valuation and robust dividend yield further enhance its attractiveness. While technical indicators show potential for growth, the company faces some challenges, which are balanced by its positive earnings outlook.

Positive Factors

Earnings

ATCO reported Q4/24 adjusted EPS well above expectations, driven mainly by ATCO Energy Systems and Corporate segment performance.

Growth Trajectory

The Q4/24 earnings report further reinforced ATCO's rising growth trajectory with higher utility rate base growth expectations.

Negative Factors

Market Reaction

Despite strong results and positive revisions, ACO.X shares traded down in the broad utility sell-off.

Valuation

Despite strong results, the ACO.X shares are still quite discounted relative to utility peers.

ATCO Ltd Cl I NV (ACO.X) vs. S&P 500 (SPY)

Market Cap

C$5.82B

Dividend Yield3.82%

Average Volume (3M)183.06K

Price to Earnings (P/E)13.4

Beta (1Y)0.52

Revenue Growth4.24%

EPS Growth0.42%

CountryCA

Employees20,582

SectorUtilities

Sector Strength89

IndustryDiversified Utilities

Share Statistics

EPS (TTM)1.42

Shares Outstanding99,810,590

10 Day Avg. Volume140,310

30 Day Avg. Volume183,057

Financial Highlights & Ratios

PEG RatioN/A

Price to Book (P/B)N/A

Price to Sales (P/S)0.00

Price to Cash Flow (P/CF)0.00

P/FCF Ratio0.00

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

C$54.20

Price Target Upside5.02% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering5

ATCO Ltd Cl I NV Business Overview & Revenue Model

Company DescriptionATCO Ltd., together with its subsidiaries, provides housing, logistics and transportation, agriculture, water, real estate, and energy and energy infrastructure solutions in Canada, Australia, and internationally. The company offers workforce and residential housing; modular facilities; construction and site support; workforce lodging; facility operations and maintenance; defense operations; and disaster and emergency management services. It also provides commercial real estate services, including sale of commercial and industrial properties; and bulk cargo and port operation services, as well as operates container port facilities. The company's portfolio includes 14 commercial real estate properties, including 417,000 square feet of office property, 60,000 square feet of industrial property, and 315 acres of land. In addition, it engages in electricity generation, distribution, transmission, and related infrastructure services; natural gas distribution; owns and operates natural gas transmission pipelines in Alberta, Saskatchewan, and northern regions of Canada, as well as in Western Australia; and builds, owns, and operates non-regulated industrial water, natural gas storage, natural gas liquids storage, and natural gas related infrastructure to serve the midstream and petrochemical sectors. Further, it sells electricity and natural gas to residential and commercial customers; and provides natural gas appliance demonstrations and small cooking schools for homemakers. ATCO Ltd. was founded in 1947 and is headquartered in Calgary, Canada. ATCO Ltd. operates as a subsidiary of Sentgraf Enterprises Ltd.

How the Company Makes MoneyATCO Ltd generates revenue through several key streams, primarily focusing on its utilities and energy sectors. The company earns income by providing electricity and natural gas services to residential, commercial, and industrial customers. Additionally, ATCO generates revenue from its structures and logistics division by offering modular construction solutions and workforce housing. The company also benefits from strategic partnerships and long-term contracts that ensure a steady flow of income. Furthermore, ATCO's operations in transportation and international markets contribute to its financial performance, leveraging its expertise in infrastructure and logistics to expand its revenue base.

ATCO Ltd Cl I NV Financial Statement Overview

Summary

ATCO Ltd. demonstrates solid operational efficiency and stable financial health typical of regulated utilities. The company manages its debt well, but profitability metrics suggest potential areas for improvement. Cash flow generation is strong, though recent free cash flow trends indicate variability.

Income Statement

Positive

ATCO Ltd. shows stable revenue with a minor decline in recent years. The gross profit margin remains strong at approximately 62.9%. EBIT and EBITDA margins are robust, indicating operational efficiency. However, the net profit margin is moderate at 8.7%, impacted by fluctuating net income.

Balance Sheet

Positive

The company maintains a moderate debt-to-equity ratio of 2.59, indicating reliance on debt financing. The equity ratio is 17.3%, suggesting a stable equity base. Return on equity is modest at 9.3%, showing room for improvement in generating shareholder value.

Cash Flow

Positive

Operating cash flow is strong, covering net income comfortably with a ratio of 5.11. However, free cash flow has shown volatility, with a recent decrease. The free cash flow to net income ratio at 0.91 indicates adequate cash generation relative to earnings.

Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
4.94B	4.74B	4.98B	4.29B	3.94B
	Gross Profit
3.11B	3.03B	3.12B	2.72B	2.59B
	EBIT
1.36B	1.50B	1.31B	1.04B	1.07B
	EBITDA
2.26B	2.27B	1.97B	1.76B	1.75B
	Net Income Common Stockholders
430.00M	432.00M	707.00M	469.00M	497.00M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
703.00M	576.00M	1.03B	1.07B	1.06B
	Total Assets
26.72B	25.36B	24.14B	23.00B	22.20B
	Total Debt
11.98B	11.17B	10.20B	10.15B	9.72B
	Net Debt
11.62B	10.88B	9.17B	9.08B	8.66B
	Total Liabilities
18.01B	16.86B	15.79B	15.05B	14.35B
	Stockholders Equity
4.63B	4.42B	4.38B	4.11B	4.05B
Cash Flow		Free Cash Flow
393.00M	400.00M	813.00M	518.00M	815.00M
	Operating Cash Flow
2.20B	1.97B	2.40B	1.86B	1.84B
	Investing Cash Flow
-1.80B	-2.58B	-1.50B	-1.38B	-1.06B
	Financing Cash Flow
-588.00M	-123.00M	-953.00M	-486.00M	-823.00M

ATCO Ltd Cl I NV Technical Analysis

Technical Analysis Sentiment

Positive

Last Price51.61

Price Trends

50DMA

49.28

Positive

100DMA

47.95

Positive

200DMA

46.74

Positive

Market Momentum

MACD

0.67

Negative

RSI

62.93

Neutral

STOCH

69.10

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:ACO.X, the sentiment is Positive. The current price of 51.61 is above the 20-day moving average (MA) of 50.23, above the 50-day MA of 49.28, and above the 200-day MA of 46.74, indicating a bullish trend. The MACD of 0.67 indicates Negative momentum. The RSI at 62.93 is Neutral, neither overbought nor oversold. The STOCH value of 69.10 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for TSE:ACO.X.

ATCO Ltd Cl I NV Peers Comparison

Overall Rating

UnderperformOutperform

Sector (63)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
ACO.X	75 Outperform	C$5.82B	13.36	9.50%	3.82%	4.24%	0.42%
CPX	72 Outperform	C$8.05B	11.37	15.24%	4.94%	-27.55%	-12.05%
CU	70 Outperform	C$7.77B	25.29	6.93%	4.79%	-1.42%	-36.31%
Sector *	63 Neutral	$8.52B	10.99	5.33%	4.38%	3.24%	-11.91%

* Utilities Sector Average

Performance Comparison

TSE:ACO.X

ATCO Ltd Cl I NV

51.60

13.47

35.33%

TSE:CPX

Capital Power

51.81

16.56

46.98%

TSE:CU

Canadian Utilities A

38.00

7.69

25.37%

AQN

Algonquin Power & Utilities

5.46

-0.79

-12.64%

EMRAF

Emera

44.55

10.80

32.00%

BIPC

Brookfield Infrastructure

38.64

5.87

17.91%

ATCO Ltd Cl I NV Earnings Call Summary

Earnings Call Date:May 07, 2025

(Q1-2025)

% Change Since: 0.00%|

Next Earnings Date:Jul 24, 2025

Earnings Call Sentiment Positive

ATCO had a robust start to 2025 with significant earnings growth and strategic expansions, particularly in its Structures and Investments segments. Despite facing some challenges such as reduced ROE for Alberta Utilities and minor impacts from tariffs, the company's strong cash flow and growth initiatives in modular housing and port operations paint a positive outlook.

Q1-2025 Updates

Positive Updates

Strong Start to 2025

ATCO achieved adjusted earnings of $160 million in Q1 2025, an increase of $12 million or 8% compared to the previous year.

ATCO Structures Growth

ATCO Structures delivered adjusted earnings of $26 million, $2 million higher than in Q1 2024, marking the 11th consecutive quarter of year-over-year adjusted earnings growth.

Neltume Ports Performance

Adjusted earnings for Neltume Ports increased by $3 million compared to the previous year, driven by improved cargo mix and margin.

Cash Flow Improvement

ATCO's standalone businesses reported cash flow from operating activities of $120 million, up from $52 million in the prior year.

Expansion in Australia

ATCO Structures opened a new manufacturing and commercial operations facility in Adelaide, South Australia, to meet growing customer needs.

Negative Updates

Reduced ROE for Alberta Utilities

The Alberta Utilities allowable ROE was reset from 9.28% in 2024 to 8.97% for 2025, with the efficiency carryover mechanism from 2023-2024 coming to an end.

Impact of Trade Uncertainty

There was a short pause in decision-making among customers during election transition periods, although it did not have a major impact on project decisions.

Tariff and Margin Impact

Slight impact on margins from tariffs, particularly in housing components like appliances coming from the US.

Company Guidance

During the first quarter of 2025, ATCO Ltd. reported adjusted earnings of $160 million, marking an 8% increase from the previous year. This growth was driven primarily by increased activity at ATCO Structures, rate base growth, and cost efficiencies at ATCO Energy Systems, as well as stronger seasonal spreads in natural gas storage services at ATCO EnPower. The company's operating segments were simplified with the inclusion of ATCO Investments, which contributed through its 40% equity investment in Neltume Ports and the acquisition of ATCO Energy in mid-2024. ATCO Structures achieved adjusted earnings of $26 million, largely due to workforce housing sale activity in Australia, while Neltume Ports experienced a $3 million increase in adjusted earnings due to an improved cargo mix and operational margin. The company's cash flow from operating activities rose to $120 million, a significant increase from the previous year's $52 million, reflecting successful efficiency initiatives. Overall, ATCO Ltd. demonstrated a strong start to the year, leveraging its diverse portfolio to capitalize on growth opportunities amidst a challenging macroeconomic environment.

ATCO Ltd Cl I NV Corporate Events

DividendsBusiness Operations and Strategy

ATCO Ltd. Declares Quarterly Eligible Dividends

Positive

Apr 10, 2025

ATCO Ltd. has announced its quarterly eligible dividends for Class I Non-Voting and Class II Voting shares, both set at $0.5045 per share, with record and payment dates in May and June 2025, respectively. This announcement reflects ATCO’s ongoing commitment to shareholder value and its strategic positioning in the global market, addressing essential needs in energy and infrastructure, which could have significant implications for its stakeholders.

Spark’s Take on TSE:ACO.X Stock

According to Spark, TipRanks’ AI Analyst, TSE:ACO.X is a Outperform.

ATCO Ltd. scores well due to robust financial performance and positive market sentiment from recent earnings. Strong technical indicators and a reasonable valuation support a favorable outlook, despite some challenges in specific segments.

To see Spark’s full report on TSE:ACO.X stock, click here.

Financial Disclosures

ATCO Ltd. to Announce Q1 2025 Financial Results

Neutral

Apr 9, 2025

ATCO Ltd. announced it will release its first-quarter 2025 financial results on May 7, 2025. The company will host a live teleconference and webcast to discuss the results, featuring key executives. This announcement is significant for stakeholders as it provides insights into ATCO’s financial performance and strategic direction, impacting its industry positioning and future operations.

Spark’s Take on TSE:ACO.X Stock

According to Spark, TipRanks’ AI Analyst, TSE:ACO.X is a Outperform.

To see Spark’s full report on TSE:ACO.X stock, click here.

Business Operations and Strategy

ATCO Frontec and Inuvialuit Development Corporation Secure $48.4M Radar Defense Contract

Positive

Apr 2, 2025

ATCO Frontec, in partnership with the Inuvialuit Development Corporation, has secured a $48.4 million contract from the Government of Canada to develop a radar defense system in the Northwest Territories. This joint venture, which includes Canadian-owned D-TA Systems Inc., aims to enhance Canada’s continental defense capabilities and create economic opportunities for the Inuvialuit community. The project is part of a broader initiative to modernize the North American Aerospace Defense Command (NORAD) and is expected to deliver significant benefits to local stakeholders.

Business Operations and StrategyFinancial Disclosures

ATCO Ltd. Reports Increased 2024 Earnings and Secures New Contracts

Positive

Feb 27, 2025

ATCO Ltd. reported an increase in adjusted earnings for 2024, reaching $481 million, up from $432 million in 2023, highlighting a strong financial performance. The company has secured multiple contracts in Canada, Australia, and Chile, and announced a significant agreement in the U.S., indicating strategic growth and expansion in its operations.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.