Hydro One (H) AI Stock Analysis

• Market Cap: C$30.34B
• Dividend Yield: 2.5%
• Average Volume (3M): 736.55K
• Price to Earnings (P/E): 24.2
• Beta (1Y): 0.38
• Revenue Growth: 8.03%
• EPS Growth: 11.78%
• Country: CA
• Employees: 7,261
• Sector: Utilities
• Sector Strength: 81
• Industry: Regulated Electric
• EPS (TTM): 0.54
• Shares Outstanding: 599,776,400
• 10 Day Avg. Volume: 784,575
• 30 Day Avg. Volume: 736,554
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): N/A
• P/FCF Ratio: N/A
• 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$51.38
• Price Target Upside: 0.75% Upside
• Rating Consensus: Hold
• Number of Analyst Covering: 6

• Rating: 76 Outperform
• Price Target: C$57.00 ▲(11.76% Upside)

Hydro One's strong financial performance and positive technical indicators are the primary drivers of its score. The earnings call provided additional confidence with growth in revenue and EPS, despite some cost challenges. The valuation suggests moderate overvaluation, but the dividend yield offers some compensation.

Positive Factors

Earnings Growth

Hydro One's EPS growth is expected to continue outpacing its rate base through 2027.

Financial Strategy

Newly appointed CFRO Harry Taylor reaffirmed the 5-7% EPS guidance through 2027, that no equity is required during that timeframe, and that the financial strategy will be unchanged.

Long-term Investment

Positive on the shares long term given the visible long-dated capex program, high-quality asset base, and strong balance sheet.

Negative Factors

Market Performance

The significant share outperformance vs. S&P/TSX Utilities Index, the premium P/E valuation of 21x, and the relative return to the unchanged $42 target drive the rating to Market Perform from Outperform.

Regulatory Uncertainty

There is uncertainty around the outcome of Hydro One's cost of capital review with the OEB, which could alter its ROE/equity layer.

Valuation

Hydro One shares are currently trading at a 35% premium to peers and are fully valued.

Hydro One Business Overview & Revenue Model

Company Description

Hydro One Limited is a Canadian electricity transmission and distribution service provider, primarily operating in the province of Ontario. The company is responsible for the transmission of high-voltage electricity across long distances and the distribution of low-voltage electricity to residential, commercial, and industrial customers. Hydro One is one of the largest regulated electricity transmission and distribution companies in North America, playing a crucial role in ensuring reliable electricity supply and supporting the energy needs of Ontario.

How the Company Makes Money

Hydro One makes money primarily through regulated electricity transmission and distribution operations. As a regulated utility, its revenue is largely determined by rates set by the Ontario Energy Board (OEB), which reflects the costs of providing service plus an allowed rate of return. The company's revenue streams include transmission tariffs charged to electricity generators and distributors for using its network to transport electricity, and distribution charges to end-users for delivering electricity to homes and businesses. Hydro One also engages in ancillary services and other electricity-related businesses, which complement its core operations. The stability and predictability of its earnings are bolstered by the regulatory framework and its monopoly status in key service areas, making it a reliable income generator.

Hydro One Financial Statement Overview

Summary

Hydro One shows solid financial health with consistent revenue growth and strong profitability margins. The balance sheet is stable but somewhat leveraged, and cash flow generation is strong, though impacted by significant capital expenditures. The company should focus on managing capital spending to improve free cash flow.

Income Statement

Hydro One's income statement shows a steady growth in total revenue over recent years, with a revenue growth rate of 2.85% in the TTM (Trailing-Twelve-Months). The gross profit margin is solid at 32.98%, although slightly decreasing from previous years. Net profit margin remains strong at 13.99%, demonstrating the company's profitability. The EBIT margin of 27.93% and EBITDA margin of 34.78% indicate efficient operational performance. Overall, the company's profitability and growth trends are positive, though slight margin compression warrants monitoring.

Balance Sheet

Hydro One maintains a moderate debt-to-equity ratio of 1.45, reflecting a balanced approach to leveraging. The return on equity (ROE) is a healthy 9.96%, indicating effective use of shareholder funds to generate profits. The equity ratio of 33.05% suggests a stable capital structure, although a higher ratio would be preferable. The balance sheet reflects stability, with consistent equity growth, but the high level of debt could pose risks if not managed carefully.

Cash Flow

The company's cash flow statement shows a decline in free cash flow, which is negative in the TTM period, indicating challenges in generating excess cash after capital expenditures. The operating cash flow to net income ratio is 2.11, showcasing strong cash generation relative to net income. However, the free cash flow to net income ratio is negative due to high capital expenditures. While operating cash flow remains robust, the negative free cash flow signals potential liquidity issues if capital spending continues at the current rate.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	8.76B	8.48B	7.84B	7.78B	7.22B	7.29B
Gross Profit	3.22B	3.03B	2.84B	2.80B	2.53B	2.37B
EBITDA	3.05B	2.89B	2.69B	2.81B	2.52B	2.36B
Net Income	1.26B	1.16B	1.08B	1.05B	965.00M	1.79B
Balance Sheet
Total Assets	37.81B	36.68B	32.85B	31.46B	30.38B	30.29B
Cash, Cash Equivalents and Short-Term Investments	71.00M	716.00M	79.00M	530.00M	540.00M	757.00M
Total Debt	18.15B	17.73B	15.74B	15.19B	14.72B	14.41B
Total Liabilities	25.33B	24.51B	21.09B	20.07B	19.41B	19.67B
Stockholders Equity	12.39B	12.09B	11.68B	11.31B	10.89B	10.53B
Cash Flow
Free Cash Flow	-401.00M	-274.00M	-64.00M	174.00M	78.00M	186.00M
Operating Cash Flow	2.44B	2.53B	2.41B	2.26B	2.15B	2.03B
Investing Cash Flow	-3.39B	-3.13B	-2.69B	-2.07B	-2.06B	-1.98B
Financing Cash Flow	949.00M	1.23B	-172.00M	-197.00M	-303.00M	674.00M

Hydro One Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 51.00
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:H, the sentiment is Positive. The current price of 51 is above the 20-day moving average (MA) of 50.03, above the 50-day MA of 49.33, and above the 200-day MA of 47.22, indicating a bullish trend. The MACD of 0.49 indicates Negative momentum. The RSI at 65.86 is Neutral, neither overbought nor oversold. The STOCH value of 60.62 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for TSE:H.

Hydro One Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
H	76 Outperform	C$30.34B	24.19	10.34%	2.50%	8.03%	11.78%
FTS	75 Outperform	$35.08B	20.48	7.50%	3.49%	4.22%	6.63%
EMA	74 Outperform	$19.77B	22.41	7.12%	5.53%	10.65%	14.09%
CPX	68 Neutral	C$9.35B	18.82	10.00%	4.38%	-16.83%	-37.24%
CU	68 Neutral	C$7.82B	23.22	7.52%	4.76%	-0.51%	-17.17%
Sector *	67 Neutral	$17.75B	18.23	5.29%	3.57%	7.33%	12.21%
BEP.UN	55 Neutral	$22.86B	―	-5.97%	5.90%	20.05%	-54.69%

Hydro One Corporate Events

Hydro One Announces Leadership Changes Amid CEO’s Temporary Leave

Hydro One Limited announced that its President and CEO, David Lebeter, will take a temporary compassionate care leave, and Harry Taylor has been appointed as Interim President and CEO. Taylor, who joined Hydro One in 2024, will continue his role as EVP, Chief Financial and Regulatory Officer. Additionally, Michael W. Rencheck has been appointed to the Board of Directors, bringing over four decades of experience in the energy industry. These leadership changes are expected to maintain the company’s operational stability and strategic growth during Lebeter’s absence.

The most recent analyst rating on (TSE:H) stock is a Hold with a C$44.00 price target. To see the full list of analyst forecasts on Hydro One stock, see the TSE:H Stock Forecast page.

Hydro One Elects New Directors Amid Strong Shareholder Support

Hydro One Limited announced the election of nine directors at its Annual and Special Meeting of Shareholders, with a significant 84.12% of shares voted. All other matters at the meeting were approved, reflecting strong shareholder support. This election is pivotal for Hydro One as it continues to focus on maintaining its leadership in the electricity transmission and distribution sector, impacting its strategic direction and stakeholder relations.

The most recent analyst rating on (TSE:H) stock is a Hold with a C$45.00 price target. To see the full list of analyst forecasts on Hydro One stock, see the TSE:H Stock Forecast page.

Hydro One Limited Appoints Melissa Sonberg as New Chair of the Board

Hydro One Limited has appointed Melissa Sonberg as the new Chair of the Board of Directors, effective June 4, 2025. Sonberg, who has been a board member since 2018, brings extensive experience from her previous roles in healthcare, Air Canada, and AIMIA Inc. Her leadership is expected to guide Hydro One in its continued investment in a safe and reliable electricity system, crucial for Ontario’s growth and prosperity. The appointment comes at a pivotal time as the company focuses on enhancing its operations and supporting community development.

The most recent analyst rating on (TSE:H) stock is a Hold with a C$45.00 price target. To see the full list of analyst forecasts on Hydro One stock, see the TSE:H Stock Forecast page.

Hydro One and Power Workers’ Union Ratify New Collective Agreement

Hydro One Inc. and the Power Workers’ Union have successfully ratified a new collective agreement effective from October 1, 2025, to March 31, 2028, which unifies the main and Customer Service Organization agreements. This agreement, reached ahead of the expiration of the previous one, highlights positive relations between the parties and ensures continued stability and service delivery in Ontario.

The most recent analyst rating on (TSE:H) stock is a Hold with a C$44.00 price target. To see the full list of analyst forecasts on Hydro One stock, see the TSE:H Stock Forecast page.

Hydro One’s 2024 Sustainability Report Highlights Strategic Growth and Environmental Initiatives

Hydro One has released its 2024 Sustainability Report, highlighting its strategic alignment with sustainability to support growth and meet the increasing energy needs of Ontarians. Key achievements include converting 44% of sedans and SUVs to EVs or hybrids, exceeding Indigenous business spending goals, establishing pollinator habitats, and securing the Wawa Timmins Power Line project with First Nations support. The report underscores Hydro One’s commitment to sustainable development and its role in fostering a robust energy infrastructure in Ontario.

The most recent analyst rating on (TSE:H) stock is a Hold with a C$44.00 price target. To see the full list of analyst forecasts on Hydro One stock, see the TSE:H Stock Forecast page.