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ATCO (TSE:ACO.Y)
TSX:ACO.Y
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ATCO
(TSX:ACO.Y)
Rating:77Outperform
Price Target:
C$61.00
▲(17.22% Upside)
ATCO (ACO.Y) vs. iShares MSCI Canada ETF (EWC)
Market Cap
$5.77B
Dividend Yield3.67%
Average Volume (3M)160.00
Price to Earnings (P/E)13.8
Beta (1Y)0.30
Revenue Growth7.64%
EPS Growth14.22%
CountryCA
Employees20,582
SectorUtilities
Sector Strength88
IndustryDiversified Utilities
Share Statistics
EPS (TTM)0.90
Shares Outstanding12,424,987
10 Day Avg. Volume210
30 Day Avg. Volume160
Financial Highlights & Ratios
PEG Ratio47.41
Price to Book (P/B)1.15
Price to Sales (P/S)1.08
P/FCF Ratio13.58
Enterprise Value/Market Cap3.73
Enterprise Value/Revenue4.24
Enterprise Value/Gross Profit6.82
Enterprise Value/Ebitda9.33
Forecast
1Y Price Target
$58.99Price Target Upside13.36% 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 through several key revenue streams across its diverse business segments. The utilities segment, which includes electricity and natural gas distribution, is a significant contributor to its revenue, benefiting from regulated rates that provide stable and predictable income. ATCO also generates revenue from its energy infrastructure operations, including electricity generation and transmission, and natural gas storage and industrial water solutions, which are often supported by long-term contracts. The structures and logistics segment offers modular construction solutions and workforce housing, serving industries such as energy, mining, and infrastructure development, which contributes to its revenue through contracts for customized solutions. Additionally, the company's diversified operations are supported by strategic partnerships and joint ventures that enhance its market reach and operational capabilities, further contributing to its revenue generation.
ATCO Earnings Call Summary
Earnings Call Date:Jul 31, 2025
(Q2-2025)
| % Change Since: -4.40%|
Next Earnings Date:Oct 23, 2025
Earnings Call Sentiment Positive
The earnings call reflects a strong financial performance with growth across multiple segments, particularly in ATCO Structures and cash flow. However, challenges remain with market perceptions of ATCO Structures' value and uncertainty around future government contracts in defense and housing.Q2-2025 Updates
Positive Updates
Increased Adjusted Earnings
ATCO achieved adjusted earnings of $101 million or $0.90 per share in the second quarter, up $5 million compared to the same period in 2024.
Strong Performance in ATCO Structures
ATCO Structures delivered adjusted earnings of $32 million, up $2 million compared to the same period in 2024. The segment posted an adjusted EBITDA of $70 million, on track to exceed last year's EBITDA of $241 million.
Cash Flow and Capital Expenditure Growth
Stand-alone ATCO businesses reported cash flow from operating activities of $192 million year-to-date, up over 30% compared to the previous year. Capital expenditures were $117 million, up $43 million year-over-year.
Growth in Global Space Rentals
ATCO Structures' global space rentals business increased fleet size by 54% over the last 5 years, maintaining an average utilization rate of 75%.
Strategic Expansion and Acquisitions
Expansion included a new manufacturing facility in Australia and strategic acquisition of NRB to enhance modular manufacturing and housing capabilities.
Negative Updates
Trading Discount in ATCO Structures
ATCO Structures is perceived to be trading at a discount compared to peers, despite strong business performance and growth.
Market Challenges in Defense and Housing Segments
Uncertainty remains regarding the timing of government defense contracts and housing projects in Canada, despite anticipated increases in spending.
Company Guidance
During ATCO Limited's Second Quarter 2025 Results Conference Call, the company reported adjusted earnings of $101 million, or $0.90 per share, marking an increase of $5 million compared to the same period in 2024. ATCO Structures delivered strong results with adjusted earnings of $32 million, an increase of $2 million year-over-year, and adjusted EBITDA of $70 million, positioning it to surpass last year's annual EBITDA of $241 million. The company also highlighted significant growth in its rental fleet size, which increased by 54% over the past five years, and maintained a 75% utilization rate across 25,700 units in five countries. ATCO's standalone businesses reported a 30% increase in operating cash flow year-to-date, totaling $192 million. Capital expenditures rose to $117 million, driven by investments in rental fleet additions, particularly in the United States. Overall, ATCO's strategic focus on geographic diversity, rental and sales growth, and reduced dependence on large projects continues to drive robust performance across its business segments.ATCO Financial Statement Overview
Summary
ATCO demonstrates solid financial health with strong revenue generation and operational efficiency. Despite high leverage and fluctuating net income margins posing potential risks, the company's ability to generate cash flow is a strength. However, managing free cash flow growth remains a challenge.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 | 5.08B | 4.94B | 4.74B | 4.98B | 4.29B | 3.94B |
| Gross Profit | 3.15B | 3.11B | 3.03B | 3.12B | 2.72B | 2.59B |
| EBITDA | 2.31B | 2.26B | 2.27B | 1.97B | 1.76B | 1.75B |
| Net Income | 439.00M | 430.00M | 432.00M | 707.00M | 246.00M | 497.00M |
Balance Sheet | ||||||
| Total Assets | 26.80B | 26.72B | 25.36B | 24.14B | 23.00B | 22.20B |
| Cash, Cash Equivalents and Short-Term Investments | 785.00M | 703.00M | 576.00M | 1.03B | 1.07B | 1.06B |
| Total Debt | 12.20B | 11.98B | 11.17B | 10.20B | 10.15B | 9.72B |
| Total Liabilities | 17.95B | 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 | 363.00M | 393.00M | 400.00M | 813.00M | 518.00M | 815.00M |
| Operating Cash Flow | 2.35B | 2.20B | 1.97B | 2.40B | 1.86B | 1.84B |
| Investing Cash Flow | -1.95B | -1.80B | -2.58B | -1.50B | -1.38B | -1.06B |
| Financing Cash Flow | -235.00M | -588.00M | -123.00M | -953.00M | -486.00M | -823.00M |
ATCO Technical Analysis
Negative
52.04
Price Trends
52.84
Negative
51.68
Positive
49.71
Positive
Market Momentum
0.15
Negative
46.58
Neutral
40.41
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:ACO.Y, the sentiment is Negative. The current price of 52.04 is below the 20-day moving average (MA) of 52.72, below the 50-day MA of 52.84, and above the 200-day MA of 49.71, indicating a neutral trend. The MACD of 0.15 indicates Negative momentum. The RSI at 46.58 is Neutral, neither overbought nor oversold. The STOCH value of 40.41 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative 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 |
|---|---|---|---|---|---|---|---|
77 Outperform | $5.77B | 13.84 | 9.27% | 3.67% | 7.64% | 14.22% | |
74 Outperform | C$7.95B | 23.59 | 7.52% | 4.71% | -0.51% | -17.17% | |
67 Neutral | €25.64B | 16.52 | 12.01% | 5.03% | -1.81% | 134.23% | |
| ― | $4.54B | ― | 5.54% | 4.38% | ― | ― | |
| ― | $4.29B | 22.64 | 6.08% | 5.30% | ― | ― | |
| ― | $14.02B | 22.80 | 7.12% | 2.24% | ― | ― | |
| ― | $5.22B | ― | 4.35% | ― | ― |
* Utilities Sector Average
Performance Comparison
TSE:ACO.Y
ATCO
52.04
9.50
22.32%
TSE:CU
Canadian Utilities A
38.67
7.17
22.76%
AQN
Algonquin Power & Utilities
5.93
0.17
2.95%
NPIFF
Northland Power
16.40
0.44
2.76%
EMA
Emera
47.06
12.97
38.05%
BIPC
Brookfield Infrastructure
39.13
4.21
12.06%
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.