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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:72Outperform
Price Target:
C$47.00
▲(7.65% Upside)
Canadian Utilities A's overall stock score is driven by strong technical indicators and a positive earnings call, highlighting growth and successful project developments. While the financial performance shows profitability, challenges in revenue growth and free cash flow generation are notable. The valuation is fair with an attractive dividend yield, supporting the stock's appeal.
Positive Factors
Strong Project Developments
The CETO project enhances Alberta's electric grid reliability, supporting long-term operational efficiency and service quality.
Successful Financing
Strong investor interest in financing activities indicates confidence in the company's financial health and growth prospects.
ATCO Australia Performance
Significant earnings growth in ATCO Australia reflects operational strength and contributes positively to overall company performance.
Negative Factors
Revenue Growth Challenges
Declining revenue growth can hinder long-term expansion and market competitiveness, requiring strategic adjustments.
Free Cash Flow Generation
Limited free cash flow generation restricts financial flexibility and investment capacity, impacting future growth initiatives.
Regulatory Headwinds
Regulatory challenges in Alberta utilities may affect profitability and operational strategies, posing risks to earnings stability.
Canadian Utilities A (CU) vs. iShares MSCI Canada ETF (EWC)
Market Cap
C$11.84B
Dividend Yield4.33%
Average Volume (3M)422.49K
Price to Earnings (P/E)22.1
Beta (1Y)0.27
Revenue Growth-0.94%
EPS Growth25.64%
CountryCA
Employees9,084
SectorUtilities
Sector Strength65
IndustryDiversified Utilities
Share Statistics
EPS (TTM)0.40
Shares Outstanding205,317,640
10 Day Avg. Volume547,242
30 Day Avg. Volume422,489
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$42.50Price Target Upside-2.66% Downside
Rating ConsensusHold
Number of Analyst Covering4
EPS Forecast (FY)N/A
Revenue Forecast (FY)N/A
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 A generates revenue through multiple key streams. The primary source of income comes from the regulated utility operations segment, which includes the distribution and transmission of electricity and natural gas. These utility services often operate under a cost-of-service model, allowing CU to earn a regulated return on its capital investments. Additionally, the company profits from its electricity generation assets, which produce power sold either to the grid or directly to large customers. The energy infrastructure segment further contributes through long-term contracts and partnerships with various industrial clients, enhancing revenue stability. CU also benefits from investments in renewable energy projects and infrastructure, which are increasingly becoming significant in the context of the global shift towards sustainable energy solutions. Strategic partnerships with local governments and private sectors facilitate access to new markets and projects, thereby supporting revenue growth.
Canadian Utilities A Earnings Call Summary
Earnings Call Date:Nov 07, 2025
(Q3-2025)
| % Change Since: |
Next Earnings Date:Feb 26, 2026
Earnings Call Sentiment Positive
The earnings call highlighted significant growth in Alberta's population, strong project developments like CETO and Yellowhead, and robust financial performance. However, challenges such as regulatory headwinds in Alberta utilities and uncertainty in hydrogen project support were noted. Overall, the sentiment reflects a predominantly positive outlook with some cautionary notes.Q3-2025 Updates
Positive Updates
Population Growth in Alberta
Alberta's population reached 5 million people, up 2.5% year-over-year, contributing to a robust project pipeline for Canadian Utilities.
Central East Transfer-Out Project (CETO)
The $280 million CETO project aims to upgrade Alberta's electric transmission system. It is on track to be completed in the first half of next year, promising enhanced reliability and efficiency.
Yellowhead Pipeline Project
The Yellowhead pipeline project remains 90% contracted and received approval from the Alberta Utilities Commission. It is a key investment aimed at improving Alberta's natural gas network.
Strong Financial Performance
Canadian Utilities reported adjusted earnings of $108 million, up from $102 million in the previous year, driven by growth across core businesses.
Successful Financing
Canadian Utilities executed a $750 million transaction of hybrid notes and a $370 million debenture transaction, both significantly oversubscribed.
ATCO Australia Performance
ATCO Australia reported adjusted earnings of $27 million, up 80% from the previous year, driven by strong growth in ATCO Gas Australia and settlement gains.
Negative Updates
Headwinds in Alberta Utilities
Faced a reduction in the approved ROE and the conclusion of the efficiency carryover mechanism, impacting Energy Systems earnings.
Potential Headwinds in Q4
Anticipated headwinds in Q4 due to the absence of tax efficiencies that were present in Q4 2024.
Uncertainty in Hydrogen Projects
Lack of definitive support from the federal government on hydrogen projects, leading to reduced confidence in these opportunities.
Company Guidance
In the third quarter of 2025, Canadian Utilities Limited highlighted significant progress in several key areas, according to their conference call. The company's adjusted earnings reached $108 million, or $0.40 per share, marking an increase from the previous year's $102 million. The growth was attributed to strong performances across core businesses, including a $280 million Central East Transfer-Out project aimed at enhancing Alberta's electric grid reliability, which is on track for completion in the first half of 2026. The company also reported significant advancements in the Yellowhead pipeline project, which is 90% contracted and poised to deliver substantial long-term benefits to Alberta's natural gas network. On the funding front, Canadian Utilities successfully executed a $750 million hybrid notes transaction and a $370 million debenture offering, demonstrating strong investor interest. Additionally, ATCO Australia delivered a remarkable 80% increase in adjusted earnings, driven by higher rates and operational outperformance, contributing to the company's robust financial position as it heads into 2026.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.70
Positive
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.60
Neutral
| Breakdown | TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 3.70B | 3.74B | 3.80B | 4.05B | 3.52B | 3.23B |
| Gross Profit | 1.48B | 1.44B | 1.45B | 1.72B | 1.36B | 1.32B |
| EBITDA | 1.94B | 1.76B | 2.03B | 1.80B | 1.53B | 1.55B |
| Net Income | 611.00M | 480.00M | 707.00M | 632.00M | 393.00M | 427.00M |
Balance Sheet | ||||||
| Total Assets | 24.67B | 23.79B | 23.16B | 21.97B | 21.07B | 20.30B |
| Cash, Cash Equivalents and Short-Term Investments | 898.00M | 332.00M | 356.00M | 698.00M | 746.00M | 776.00M |
| Total Debt | 12.07B | 11.11B | 10.59B | 9.59B | 9.57B | 9.11B |
| Total Liabilities | 17.50B | 16.67B | 16.00B | 14.91B | 14.25B | 13.49B |
| Stockholders Equity | 6.95B | 6.91B | 6.94B | 6.88B | 6.63B | 6.62B |
Cash Flow | ||||||
| Free Cash Flow | 262.00M | 322.00M | -12.00M | 771.00M | 497.00M | 741.00M |
| Operating Cash Flow | 1.94B | 1.92B | 1.33B | 2.14B | 1.72B | 1.63B |
| Investing Cash Flow | -1.67B | -1.41B | -2.25B | -1.26B | -1.26B | -905.00M |
| Financing Cash Flow | 200.00M | -790.00M | 434.00M | -932.00M | -478.00M | -924.00M |
Canadian Utilities A Technical Analysis
Positive
43.66
Price Trends
42.14
Positive
40.18
Positive
38.54
Positive
Market Momentum
0.47
Negative
69.89
Neutral
86.60
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 43.66 is above the 20-day moving average (MA) of 42.73, above the 50-day MA of 42.14, and above the 200-day MA of 38.54, indicating a bullish trend. The MACD of 0.47 indicates Negative momentum. The RSI at 69.89 is Neutral, neither overbought nor oversold. The STOCH value of 86.60 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 |
|---|---|---|---|---|---|---|---|
72 Outperform | C$11.84B | 22.14 | 8.84% | 4.33% | -0.94% | 25.64% | |
66 Neutral | $17.65B | 18.10 | 5.60% | 3.62% | 6.62% | 11.55% | |
65 Neutral | C$5.79B | 14.96 | 9.32% | 3.62% | 7.75% | 11.25% | |
64 Neutral | C$9.55B | 21.75 | 9.40% | 4.44% | -2.99% | -32.11% | |
54 Neutral | C$6.88B | -164.53 | 2.04% | 4.32% | -4.72% | 96.98% | |
54 Neutral | C$8.20B | -42.16 | ― | 4.56% | 3.29% | 76.89% | |
49 Neutral | C$5.09B | ― | -8.42% | 1.46% | -11.00% | -227.07% |
* Utilities Sector Average
TSE:CU
Canadian Utilities A
43.66
10.97
33.55%
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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.