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ATCO (TSE:ACO.Y)
TSX:ACO.Y
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ATCO
(TSX:ACO.Y)
Rating:74Outperform
Price Target:
C$59.00
▲(9.02%Upside)
ATCO (ACO.Y) vs. iShares MSCI Canada ETF (EWC)
Market Cap
$5.71B
Dividend Yield3.84%
Average Volume (3M)247.00
Price to Earnings (P/E)14.2
Beta (1Y)0.32
Revenue Growth6.84%
EPS Growth4.03%
CountryCA
Employees20,582
SectorUtilities
Sector Strength71
IndustryDiversified Utilities
Share Statistics
EPS (TTM)1.42
Shares Outstanding12,424,987
10 Day Avg. Volume160
30 Day Avg. Volume247
Financial Highlights & Ratios
PEG Ratio-16.94
Price to Book (P/B)1.20
Price to Sales (P/S)0.00
P/FCF Ratio11.79
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$59.00Price Target Upside9.02% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering1
ATCO Business Overview & Revenue Model
Company DescriptionATCO Ltd., together with its subsidiaries, engages in the provision of 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, lease, and development of commercial and industrial properties; and engages in processing and marketing of fly ash. In addition, it generates electricity through hydro, solar, wind, and natural gas facilities, as well as provides electricity distribution, transmission, storage, and related infrastructure services; offers natural gas transmission, distribution, storage, and retail sales; natural gas liquids storage services; and provides integrated water services, including pipeline transportation, storage, water treatment, recycling, and disposal to various industrial customers. 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 makes money primarily through its diverse portfolio of businesses, which are organized into several key segments. The Utilities segment generates revenue by providing electricity and natural gas distribution services, where customers are typically billed based on usage and regulated rates. The Structures and Logistics segment earns income by designing, manufacturing, and leasing modular structures for various applications, including workforce housing and office space, often under long-term contracts. Additionally, the Energy Infrastructure segment contributes to revenue through the development, operation, and maintenance of energy assets such as power plants. ATCO also engages in transportation services, offering rail and freight solutions. The company's earnings are further supported by strategic partnerships and joint ventures that enhance its market presence and operational capabilities.
ATCO Earnings Call Summary
Earnings Call Date:May 07, 2025
(Q1-2025)
| % Change Since: 2.12%|
Next Earnings Date:Jul 31, 2025
Earnings Call Sentiment Positive
The earnings call reflects a positive overall sentiment, with strong financial performance and growth across multiple segments, including ATCO Structures and ATCO Investments. Despite some regulatory headwinds and minor impacts from tariffs, the company's robust cash flow and strategic expansions indicate confidence in future growth.Q1-2025 Updates
Positive Updates
Strong Start to 2025
ATCO achieved adjusted earnings of $160 million in Q1 2025, an 8% increase from the previous year, driven by increased activity at ATCO Structures and growth in rate base and cost efficiencies at ATCO Energy Systems.
ATCO Structures Growth
ATCO Structures delivered adjusted earnings of $26 million in Q1 2025, marking the 11th consecutive quarter of year-over-year growth, with a $2 million increase from the prior year due to workforce housing sales in Australia.
Successful ATCO Investments Segment
The newly created ATCO Investments segment saw growth, with Neltume Ports delivering $3 million in adjusted earnings growth due to improved cargo mix and margins.
Cash Flow Growth
ATCO businesses reported cash flow from operating activities of $120 million in Q1, up from $52 million in the prior year, driven by timing and focus on efficiencies.
Expansion and Strategic Investments
ATCO Structures expanded its manufacturing and operations in Adelaide, South Australia, and continues to invest in market share and expansion strategy in Canada, the US, and Australia.
Negative Updates
Regulatory Headwinds in Canadian Utilities
Canadian Utilities faced a decrease in allowable ROE from 9.28% in 2024 to 8.97% in 2025, and the end of a 50 basis point efficiency carryover mechanism.
Impact of Tariffs
ATCO Structures faced slight margin impacts due to tariffs on appliances and other goods imported from the US, with minor effects on North American operations.
Company Guidance
During the first quarter of fiscal year 2025, ATCO Ltd. reported adjusted earnings of $160 million, marking an 8% increase from the previous year. The growth was attributed to increased activity in ATCO Structures, rate base growth and cost efficiencies at ATCO Energy Systems, stronger seasonal spreads in natural gas storage at ATCO EnPower, and contributions from the newly created ATCO Investments segment. Canadian Utilities experienced earnings growth driven by rate base increases despite an ROE reset from 9.28% to 8.97% and the end of a 50 basis point efficiency carryover mechanism. ATCO Structures reported adjusted earnings of $26 million, bolstered by workforce housing activity in Australia. The ATCO Investments segment saw growth from its 40% equity investment in Neltume Ports and the acquisition of ATCO Energy. Operating cash flow from ATCO's stand-alone businesses was $120 million, up from $52 million in the previous year, supporting the company’s operations and capital program. ATCO’s strategic focus includes organic capital investment funded by internally generated cash flow, with future growth expected from segments like ATCO Investments and Structures & Logistics.ATCO Financial Statement Overview
Summary
ATCO demonstrates solid financial health with strong revenue and operational efficiency. However, high leverage and fluctuating net income margins pose risks. Cash flow generation is robust, yet inconsistent free cash flow growth highlights management challenges.Income Statement
ATCO has demonstrated stable revenue growth with the TTM showing a modest increase in total revenue. The gross profit margin remains strong, although the net profit margin has seen some fluctuations due to variations in net income. The EBIT and EBITDA margins are robust, indicating efficient operations, but the decline in net income in recent periods requires attention.75
Positive
Balance Sheet
The balance sheet shows a high debt-to-equity ratio, suggesting significant leverage. However, the company maintains a stable equity ratio, and the return on equity remains positive. The increase in total assets and stockholders' equity over time provides a cushion against liabilities, although high debt levels could pose risks if not managed carefully.68
Positive
Cash Flow
ATCO's cash flow statements reveal a healthy operating cash flow that consistently exceeds net income, reflecting strong operational cash generation. However, free cash flow growth has been inconsistent, with recent periods showing a decline. The free cash flow to net income ratio indicates room for improvement in cash flow management relative to profitability.72
Positive
| 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 |
| EBITDA | 2.21B | 2.26B | 2.27B | 1.97B | 1.76B | 1.75B |
| Net Income | 427.00M | 430.00M | 432.00M | 707.00M | 246.00M | 497.00M |
Balance Sheet | ||||||
| Total Assets | 27.10B | 26.72B | 25.36B | 24.14B | 23.00B | 22.20B |
| Cash, Cash Equivalents and Short-Term Investments | 957.00M | 703.00M | 576.00M | 1.03B | 1.07B | 1.06B |
| Total Debt | 12.19B | 11.98B | 11.17B | 10.20B | 10.15B | 9.72B |
| Total Liabilities | 18.25B | 18.01B | 16.86B | 15.79B | 15.05B | 14.35B |
| Stockholders Equity | 4.73B | 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 Technical Analysis
Positive
54.12
Price Trends
52.58
Positive
51.07
Positive
49.49
Positive
Market Momentum
-0.04
Negative
58.81
Neutral
36.99
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:ACO.Y, the sentiment is Positive. The current price of 54.12 is above the 20-day moving average (MA) of 52.72, above the 50-day MA of 52.58, and above the 200-day MA of 49.49, indicating a bullish trend. The MACD of -0.04 indicates Negative momentum. The RSI at 58.81 is Neutral, neither overbought nor oversold. The STOCH value of 36.99 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for TSE:ACO.Y.
ATCO Peers Comparison
Overall Rating
UnderperformOutperform
Sector (67)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
74 Outperform | $5.71B | 14.22 | 9.23% | 3.84% | 6.84% | 4.03% | |
72 Outperform | C$7.85B | 26.15 | 6.76% | 4.78% | -0.53% | -31.77% | |
67 Neutral | $16.46B | 16.85 | 4.47% | 3.80% | 4.76% | 6.06% | |
| ― | $4.49B | ― | 5.54% | 4.42% | ― | ― | |
| ― | $4.42B | 23.65 | 6.08% | 5.16% | ― | ― | |
| ― | $13.51B | 21.73 | 7.12% | 4.52% | ― | ― | |
| ― | $5.57B | ― | 4.06% | ― | ― |
* Utilities Sector Average
Performance Comparison
TSE:ACO.Y
ATCO
54.13
13.10
31.95%
TSE:CU
Canadian Utilities A
38.14
8.83
30.13%
AQN
Algonquin Power & Utilities
5.87
0.24
4.26%
NPIFF
Northland Power
16.79
1.01
6.40%
EMA
Emera
45.14
12.41
37.92%
BIPC
Brookfield Infrastructure
41.78
5.21
14.25%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
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.