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

• Market Cap: C$5.87B
• Dividend Yield: 3.79%
• Average Volume (3M): 178.52K
• Price to Earnings (P/E): 13.7
• Beta (1Y): 0.50
• Revenue Growth: 6.84%
• EPS Growth: 4.03%
• Country: CA
• Employees: 20,582
• Sector: Utilities
• Sector Strength: 87
• Industry: Diversified Utilities
• EPS (TTM): 1.42
• Shares Outstanding: 99,810,590
• 10 Day Avg. Volume: 231,688
• 30 Day Avg. Volume: 178,523
• PEG Ratio: -17.02
• Price to Book (P/B): 1.20
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 11.64
• 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$55.60
• Price Target Upside: 6.74% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 5

• Rating: 82 Outperform
• Price Target: C$59.00 ▲( 13.27% Upside)

ATCO Ltd. demonstrates strong overall performance driven by solid financials, positive technical indicators, and strategic growth initiatives highlighted in the recent earnings call. The company's attractive valuation and dividend yield further enhance its investment appeal, making it a robust choice in the diversified utilities sector.

Positive Factors

Earnings Report

The strong earnings report signaled a robust start to the year, driven by consistent growth in Alberta utilities and a resilient contribution from ATCO Structures.

Growth Trajectory

The creation of the ATCO Investments segment is expected to contribute to the company's growth trajectory.

Stock Rating

Analyst maintains an Outperform rating and boosts the target price to $56.

Negative Factors

Market Reaction

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

Stock Performance

ACO.X shares underperformed compared to utility peers despite a positive earnings report and outlook.

Stock Valuation

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

ATCO Ltd Cl I NV Business Overview & Revenue Model

Company Description

ATCO 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 Money

ATCO 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 exhibits solid financial performance with consistent revenue growth and strong operating margins. However, the decrease in net profit margin presents a slight profitability concern. The balance sheet shows moderate debt levels, and while cash flow management is strong, improving net profitability and debt management remain key focus areas.

Income Statement

The company's income statement shows consistent revenue growth with a TTM (Trailing-Twelve-Months) increase of 1.76% compared to the previous annual period. The gross profit margin is strong at 62.37%, indicating efficient cost management. The EBIT and EBITDA margins are healthy at 27.05% and 44.01% respectively, demonstrating solid operating performance. However, the net profit margin decreased slightly to 8.49% in TTM, suggesting potential profitability challenges.

Balance Sheet

The balance sheet reflects a moderate debt-to-equity ratio of 2.58, highlighting the company's reliance on debt financing. The return on equity stands at 9.03%, indicating reasonable shareholder returns. The equity ratio is 17.45%, suggesting a balanced approach to asset financing, but there is room for improvement in leveraging equity more effectively.

Cash Flow

Cash flow analysis reveals a strong operating cash flow to net income ratio of 5.62, highlighting effective cash generation relative to profits. The free cash flow to net income ratio is 1.14, indicating robust free cash flow generation. The free cash flow growth rate increased by 23.93% in the TTM, showcasing improved cash management and investment capabilities.

Breakdown
TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
5.03B	4.94B	4.74B	4.98B	4.29B	3.94B
	Gross Profit
3.14B	3.11B	3.03B	3.12B	2.72B	2.59B
	EBIT
1.36B	1.36B	1.50B	1.31B	1.04B	1.07B
	EBITDA
2.21B	2.26B	2.27B	1.97B	1.76B	1.75B
	Net Income Common Stockholders
427.00M	430.00M	432.00M	707.00M	469.00M	497.00M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
576.00M	703.00M	576.00M	1.03B	1.07B	1.06B
	Total Assets
25.36B	26.72B	25.36B	24.14B	23.00B	22.20B
	Total Debt
11.17B	11.98B	11.17B	10.20B	10.15B	9.72B
	Net Debt
10.90B	11.62B	10.88B	9.17B	9.08B	8.66B
	Total Liabilities
16.86B	18.01B	16.86B	15.79B	15.05B	14.35B
	Stockholders Equity
4.42B	4.63B	4.42B	4.38B	4.11B	4.05B
Cash Flow		Free Cash Flow
487.00M	393.00M	400.00M	813.00M	518.00M	815.00M
	Operating Cash Flow
2.40B	2.20B	1.97B	2.40B	1.86B	1.84B
	Investing Cash Flow
-1.85B	-1.80B	-2.58B	-1.50B	-1.38B	-1.06B
	Financing Cash Flow
-500.00M	-588.00M	-123.00M	-953.00M	-486.00M	-823.00M

ATCO Ltd Cl I NV Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 52.09
• 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:ACO.X, the sentiment is Positive. The current price of 52.09 is above the 20-day moving average (MA) of 50.99, above the 50-day MA of 49.97, and above the 200-day MA of 47.29, indicating a bullish trend. The MACD of 0.44 indicates Negative momentum. The RSI at 60.35 is Neutral, neither overbought nor oversold. The STOCH value of 83.13 is Negative, 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

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
ACO.X	82 Outperform	C$5.87B	13.69	9.25%	3.79%	6.84%	4.03%
CU	72 Outperform	C$7.80B	26.04	6.76%	4.77%	-0.53%	-31.77%
CPX	71 Outperform	C$8.40B	11.74	15.24%	4.74%	-27.55%	-12.05%
Sector *	63 Neutral	$8.54B	10.36	4.69%	4.37%	4.05%	-12.96%
AQN		$4.26B	―	5.54%	5.48%	―	―
EMRAF		$13.36B	21.64	7.12%	4.61%	―	―
BIPC		$5.21B	―		4.22%	―	―

ATCO Ltd Cl I NV Corporate Events

ATCO Ltd. Issues $250 Million in Senior Unsecured Notes

ATCO Ltd. announced the issuance of $250 million in Senior Unsecured Notes with a 3.878% yield, maturing in 2030. The proceeds will be used to repay existing debts and for general corporate purposes, potentially strengthening the company’s financial position and supporting its diverse operations across multiple industries.

The most recent analyst rating on ($TSE:ACO.X) stock is a Buy with a C$52.50 price target. To see the full list of analyst forecasts on ATCO Ltd Cl I NV stock, see the TSE:ACO.X Stock Forecast page.

ATCO Ltd. Announces Successful Director Elections at Annual Meeting

ATCO Ltd. announced the successful election of nine directors at its Annual Meeting of Share Owners, with each nominee receiving over 96% of votes in favor. This election reinforces ATCO’s governance structure as the company continues to address global challenges in energy, housing, and infrastructure, potentially impacting its strategic direction and stakeholder engagement.

The most recent analyst rating on ($TSE:ACO.X) stock is a Buy with a C$52.50 price target. To see the full list of analyst forecasts on ATCO Ltd Cl I NV stock, see the TSE:ACO.X Stock Forecast page.

Leadership Changes at Canadian Utilities: Southern and Myles Take Key Roles

Canadian Utilities Limited has announced the appointment of Nancy Southern as Executive Chair and Bob Myles as Chief Executive Officer, effective May 8, 2025. Nancy Southern will continue to guide the company’s strategic direction and advocate for national issues, while Bob Myles will oversee the company’s diverse operations, leveraging his extensive experience in the utilities and energy sectors. This leadership change is expected to drive Canadian Utilities into a more modernized and growth-oriented era, enhancing its operational success and stakeholder relationships.

ATCO Ltd. Advances Sustainability with 2024 Report

ATCO Ltd. has released its 2024 Sustainability Report, highlighting significant advancements in its environmental, social, and governance (ESG) performance. Key achievements include the installation of 118,000 smart meters in Alberta, significant reductions in greenhouse gas emissions, and substantial economic benefits to Indigenous groups. The company also invested in community initiatives and was recognized as a top employer. These efforts underscore ATCO’s commitment to sustainability and its strategic focus on fostering innovation and resilience in the energy sector.

ATCO Ltd. Reports Strong Q1 2025 Earnings and Strategic Growth

ATCO Ltd. reported first-quarter 2025 adjusted earnings of $160 million, an increase from the previous year, highlighting strong performance in its energy and infrastructure sectors. The company secured significant contracts across Canada, the US, and Australia, and invested heavily in regulated utilities, indicating robust growth and market expansion.

ATCO Ltd. Declares Quarterly Eligible Dividends

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.

ATCO Ltd. to Announce Q1 2025 Financial Results

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.

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

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.

ATCO Ltd. Reports Increased 2024 Earnings and Secures New Contracts

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.