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Canadian Utilities A (TSE:CU)
TSX:CU
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Canadian Utilities A
(TSX:CU)
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Rating:66Neutral
Price Target:
C$41.00
â–²(5.05% Upside)
Canadian Utilities A's overall stock score is driven by strong financial performance and positive earnings call insights, despite technical indicators showing bearish trends. The valuation is attractive with a high dividend yield, but high leverage and regulatory challenges pose risks.
Positive Factors
Strong Earnings Growth
The increase in adjusted earnings reflects the company's ability to maintain profitability despite external challenges, indicating a resilient business model.
Yellowhead Pipeline Progress
The progress on the Yellowhead pipeline project underscores Canadian Utilities' strategic investments in infrastructure, promising long-term economic benefits and growth.
Cash Flow Generation
Strong cash flow generation enhances financial flexibility, allowing the company to fund projects and manage debt effectively, supporting sustainable growth.
Negative Factors
High Leverage
High leverage can increase financial risk, potentially limiting the company's ability to invest in new projects or weather economic downturns.
Regulatory Challenges
Ongoing regulatory challenges could impact future earnings and operational flexibility, posing risks to the company's strategic initiatives.
Declining Revenue Growth
Negative revenue growth suggests potential difficulties in expanding market share or demand, which could affect long-term profitability and competitiveness.
Canadian Utilities A (CU) vs. iShares MSCI Canada ETF (EWC)
Market Cap
C$7.94B
Dividend Yield4.68%
Average Volume (3M)416.55K
Price to Earnings (P/E)23.7
Beta (1Y)0.42
Revenue Growth-0.51%
EPS Growth-17.17%
CountryCA
Employees9,084
SectorUtilities
Sector Strength65
IndustryDiversified Utilities
Share Statistics
EPS (TTM)0.38
Shares Outstanding205,244,030
10 Day Avg. Volume302,344
30 Day Avg. Volume416,554
Financial Highlights & Ratios
PEG Ratio-0.54
Price to Book (P/B)1.37
Price to Sales (P/S)2.53
P/FCF Ratio29.37
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
C$41.50Price Target Upside6.33% Upside
Rating ConsensusHold
Number of Analyst Covering2
Canadian Utilities A Business Overview & Revenue Model
Company DescriptionCanadian Utilities Limited and its subsidiaries engage in the electricity, natural gas, and retail energy businesses worldwide. It operates through Utilities, Energy Infrastructure, and Corporate & Other segments. The Utilities segment provides regulated electricity transmission and distribution services in northern and central east Alberta, the Yukon, and the Northwest Territories; and integrated natural gas transmission and distribution services in Alberta, the Lloydminster area of Saskatchewan, and Western Australia. It owns and operates approximately 9,000 kilometers of natural gas pipelines, 16 compressor sites, approximately 3,700 receipt and delivery points, and a salt cavern storage peaking facility located near Fort Saskatchewan, Alberta in Canada. The Energy Infrastructure segment provides electricity generation, natural gas storage, industrial water, and related infrastructure development solutions in Alberta, the Yukon, the Northwest Territories, Australia, Mexico, and Chile. The Corporate & Other segment retails electricity and natural gas business in Alberta. The company was incorporated in 1927 and is headquartered in Calgary, Canada. Canadian Utilities Limited is a subsidiary of ATCO Ltd.
How the Company Makes MoneyCanadian Utilities makes money through a diverse set of revenue streams primarily tied to its regulated and unregulated energy businesses. In the electricity sector, the company generates revenue from the generation, transmission, and distribution of electricity to residential, commercial, and industrial customers in regulated markets, ensuring stable and predictable cash flows. The pipelines and liquids segment contributes to its earnings by transporting and distributing natural gas, with revenues coming from regulated tariffs and contracts. Additionally, Canadian Utilities earns income from its retail energy operations by selling electricity and natural gas directly to end customers. The company's revenue model is bolstered by long-term contracts and regulatory frameworks that provide steady income streams, while its international operations and investments in infrastructure development and industrial water solutions offer opportunities for growth and diversification.
Canadian Utilities A Earnings Call Summary
Earnings Call Date:Jul 31, 2025
(Q2-2025)
| % Change Since: |
Next Earnings Date:Oct 23, 2025
Earnings Call Sentiment Neutral
The earnings call presented a balanced view with strong growth in earnings and significant progress on major projects like the Yellowhead pipeline and energy systems expansions. However, regulatory challenges and environmental risks such as wildfires and a challenging wind environment posed significant concerns.Q2-2025 Updates
Positive Updates
Strong Earnings Growth
Canadian Utilities achieved adjusted earnings of CAD 121 million, up from CAD 117 million in the same period in 2024, despite significant headwinds.
ATCO Energy Systems Performance
ATCO Energy Systems delivered adjusted earnings of CAD 116 million, CAD 4 million higher year-over-year, driven by growth in rate base and cost efficiencies.
Yellowhead Pipeline Progress
The CAD 2.8 billion Yellowhead pipeline project is 90% contracted, expected to create 24,000 jobs by 2028, contribute CAD 20 billion in investments, and add CAD 3.9 billion annually to Alberta's GDP.
Gas Storage Expansion
Canadian Utilities plans to expand existing storage capacity by approximately 10% through well development and facility improvement projects, with strong fundamentals in the market.
Negative Updates
Regulatory Challenges
The Alberta Utilities Commission decisions on the PBR2 framework and efficiency gains have been contested, with an appeal expected in the Alberta Court of Appeal by 2026.
Renewable Generation Challenges
ATCO EnPower faced a challenging wind environment in Alberta, impacting earnings growth in the renewable sector.
Wildfire Risks
Over 50 active wildfires in Alberta pose risks, though there has been no material impact on assets so far.
Company Guidance
During the second quarter 2025 conference call for Canadian Utilities Limited, the company provided detailed guidance on several key metrics. The Central East Transfer-Out (CETO) project remains on track for completion in mid-2026, with an estimated cost of CAD 280 million, while the Yellowhead pipeline project, valued at CAD 2.8 billion, is expected to begin construction in 2026, delivering substantial economic benefits to Alberta. Adjusted earnings for the quarter reached CAD 121 million or CAD 0.45 per share, reflecting year-over-year growth despite headwinds such as a reduction in the return on equity for Alberta Utilities and challenges in renewable generation. The ATCO Energy Systems segment reported adjusted earnings of CAD 116 million, and ATCO EnPower achieved CAD 12 million, with strong performance in natural gas storage. ATCO Australia also contributed significantly with a 24% increase in adjusted earnings, reaching CAD 21 million due to a higher return on equity under the Sixth Access Arrangement. The company emphasized its robust capital program, with year-to-date capital expenditures increasing by CAD 145 million to CAD 783 million, funded by a combination of cash flow and external resources.Canadian Utilities A Financial Statement Overview
Summary
Canadian Utilities A demonstrates strong profitability and cash flow generation, though it faces challenges with declining revenue growth and high leverage. The company maintains healthy margins and cash flow ratios, but the high debt levels require careful management to mitigate financial risks.Income Statement
The company shows strong profitability with a consistent gross profit margin above 60% and a net profit margin around 14% in TTM. However, revenue growth has been negative in recent periods, indicating a potential challenge in expanding sales. EBIT and EBITDA margins remain healthy, suggesting efficient operations despite revenue declines.65
Positive
Balance Sheet
The balance sheet reflects a high debt-to-equity ratio of 1.63 in TTM, indicating significant leverage which could pose risks if not managed properly. Return on equity is moderate at 7.5%, showing decent profitability relative to shareholder equity. The equity ratio is stable, reflecting a balanced asset structure.60
Neutral
Cash Flow
Cash flow analysis shows positive trends with a free cash flow growth rate of 16.1% in TTM, indicating improved cash generation. The operating cash flow to net income ratio is strong at 2.43, suggesting efficient cash conversion. However, the free cash flow to net income ratio is relatively low at 0.14, indicating limited free cash flow relative to net income.70
Positive
| Breakdown | TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 3.72B | 3.74B | 3.80B | 4.05B | 3.52B | 3.23B |
| Gross Profit | 1.50B | 1.44B | 1.45B | 1.72B | 1.36B | 1.32B |
| EBITDA | 1.82B | 1.76B | 2.03B | 1.80B | 1.53B | 1.55B |
| Net Income | 523.00M | 480.00M | 707.00M | 632.00M | 393.00M | 427.00M |
Balance Sheet | ||||||
| Total Assets | 23.88B | 23.79B | 23.16B | 21.97B | 21.07B | 20.30B |
| Cash, Cash Equivalents and Short-Term Investments | 401.00M | 332.00M | 356.00M | 698.00M | 746.00M | 776.00M |
| Total Debt | 11.36B | 11.11B | 10.59B | 9.59B | 9.57B | 9.11B |
| Total Liabilities | 16.69B | 16.67B | 16.00B | 14.91B | 14.25B | 13.49B |
| Stockholders Equity | 6.98B | 6.91B | 6.94B | 6.88B | 6.63B | 6.62B |
Cash Flow | ||||||
| Free Cash Flow | 288.00M | 322.00M | -12.00M | 771.00M | 497.00M | 741.00M |
| Operating Cash Flow | 2.02B | 1.92B | 1.33B | 2.14B | 1.72B | 1.63B |
| Investing Cash Flow | -1.55B | -1.41B | -2.25B | -1.26B | -1.26B | -905.00M |
| Financing Cash Flow | -428.00M | -790.00M | 434.00M | -932.00M | -478.00M | -924.00M |
Canadian Utilities A Technical Analysis
Positive
39.03
Price Trends
38.18
Positive
37.79
Positive
36.10
Positive
Market Momentum
0.19
Negative
66.17
Neutral
93.50
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:CU, the sentiment is Positive. The current price of 39.03 is above the 20-day moving average (MA) of 38.09, above the 50-day MA of 38.18, and above the 200-day MA of 36.10, indicating a bullish trend. The MACD of 0.19 indicates Negative momentum. The RSI at 66.17 is Neutral, neither overbought nor oversold. The STOCH value of 93.50 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for TSE:CU.
Canadian Utilities A Peers Comparison
UnderperformOutperform
Sector (66)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
75 Outperform | C$35.35B | 20.67 | 7.53% | 3.50% | 4.22% | 6.63% | |
73 Outperform | C$5.66B | 13.28 | 9.28% | 3.84% | 7.64% | 14.22% | |
71 Outperform | C$29.90B | 23.61 | 10.14% | 2.60% | 8.03% | 11.78% | |
68 Neutral | C$5.66B | 12.81 | 9.28% | 3.96% | 7.64% | 14.22% | |
67 Neutral | C$19.88B | 22.55 | 7.22% | 5.48% | 10.65% | 14.09% | |
66 Neutral | C$7.94B | 23.71 | 7.52% | 4.68% | -0.51% | -17.17% | |
66 Neutral | $17.65B | 18.10 | 5.60% | 3.62% | 6.62% | 11.55% |
* Utilities Sector Average
TSE:CU
Canadian Utilities A
39.03
5.15
15.20%
TSE:ACO.X
ATCO Ltd Cl I NV
50.59
4.57
9.93%
TSE:H
Hydro One
49.86
6.14
14.04%
TSE:FTS
Fortis
70.19
11.59
19.78%
TSE:EMA
Emera
67.00
17.00
33.99%
TSE:ACO.Y
ATCO
52.10
3.49
7.19%
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.