Hydro One Limited (TSE:H)
TSX:H
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Hydro One
(TSX:H)
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Rating:64Neutral
Price Target:
C$63.00
▲(8.06% Upside)
Action:Reiterated
Date:05/15/26
The score is driven primarily by stable profitability and constructive earnings-call fundamentals (reaffirmed growth guidance, improving Q1 results, and a visible project pipeline). Offsetting this are weaker financial quality signals from negative recent free cash flow and meaningful leverage, while technicals are neutral-to-slightly positive and valuation is somewhat elevated for the sector with only a moderate yield.
Positive Factors
Regulated revenue model
Hydro One's earnings derive from regulator-set transmission and distribution rates tied to a growing rate base, providing persistent, contract-like cash flows. This business model yields predictable revenue recovery for allowed costs and returns, supporting multi-year planning and capital investment.
Negative Factors
Elevated leverage
Meaningful leverage is typical for utilities but Hydro One's higher debt load increases sensitivity to rising rates and raises financing risk for continued capital programs. Elevated leverage can constrain flexibility, amplify interest expense variability, and make long-term financing costs a critical watch item for credit metrics.
Read all positive and negative factors
Positive Factors
Negative Factors
Regulated revenue model
Hydro One's earnings derive from regulator-set transmission and distribution rates tied to a growing rate base, providing persistent, contract-like cash flows. This business model yields predictable revenue recovery for allowed costs and returns, supporting multi-year planning and capital investment.
Read all positive factors
Hydro One (H) vs. iShares MSCI Canada ETF (EWC)
Market Cap
C$34.81B
Dividend Yield2.43%
Average Volume (3M)1.16M
Price to Earnings (P/E)24.8
Beta (1Y)0.21
Revenue Growth6.36%
EPS Growth12.30%
CountryCA
Employees7,261
SectorUtilities
Sector Strength65
IndustryRegulated Electric
Share Statistics
EPS (TTM)2.29
Shares Outstanding599,781,800
10 Day Avg. Volume877,316
30 Day Avg. Volume1,163,016
Financial Highlights & Ratios
PEG Ratio1.57
Price to Book (P/B)2.59
Price to Sales (P/S)3.62
P/FCF Ratio-119.15
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
C$58.83Price Target Upside0.91% Upside
Rating ConsensusHold
Number of Analyst Covering6
EPS Forecast (FY)2.29
Revenue Forecast (FY)C$9.37B
Hydro One Business Overview & Revenue Model
Company Description
Hydro One Limited, through its subsidiaries, operates as an electricity transmission and distribution company in Ontario. It operates through three segments: Transmission Business, Distribution Business, and Other. The company owns and operates ap...
How the Company Makes Money
Hydro One makes money primarily through regulated utility revenues earned from transmitting and distributing electricity in Ontario. Its main revenue streams are: (1) Electricity transmission: Hydro One earns revenue by providing high-voltage tran...
Hydro One Earnings Call Summary
Earnings Call Date:May 13, 2026
(Q1-2026)
| % Change Since: |
Next Earnings Date:Aug 11, 2026
Earnings Call Sentiment Positive
The call presented multiple operational and financial strengths — EPS and net income growth, revenue increases, strong balance sheet metrics, sizable project awards and broad customer support for the upcoming joint rate application. Recognized safety and cultural achievements and an experienced succession plan further support stability. Key negatives were the OEB’s denial of $69 million in storm-cost recovery, higher interest and certain cost pressures, and regulatory/timing uncertainty around recovery mechanisms and future approvals. On balance, the positives (growth pipeline, financial performance, customer backing and credit strength) materially outweigh the cited challenges, though regulatory risk remains a watch item.Positive Updates
Earnings and Net Income Growth
Basic EPS of $0.65 in Q1 2026 versus $0.60 in Q1 2025 (≈+8.3%). Net income attributable to common shareholders increased 9.2% year-over-year, driven by higher volumes, higher OEB-approved 2026 rates and higher average monthly peak transmission demand.
Negative Updates
OEB Z-Factor Decision — $69 Million Disallowed
Ontario Energy Board denied recovery of $69 million of incremental revenue related to costs from the March 2025 ice storm. Management is reviewing next steps; the decision was characterized as narrow and based on the regulator's view of Hydro One's strong prior-year financials.
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Q1-2026 Updates
Positive
Negative
Earnings and Net Income Growth
Basic EPS of $0.65 in Q1 2026 versus $0.60 in Q1 2025 (≈+8.3%). Net income attributable to common shareholders increased 9.2% year-over-year, driven by higher volumes, higher OEB-approved 2026 rates and higher average monthly peak transmission demand.
Read all positive updates
Company Guidance
Management reaffirmed EPS growth guidance of 6–8% annually for the rate period (using normalized 2022 EPS of $1.61 as the base) and announced a common dividend of $0.3531 per share payable June 10, 2026; Q1 results included basic EPS of $0.65 (vs. $0.60 a year ago) and net income up 9.2% year‑over‑year, revenue net of purchased power +3% (transmission +4.4%, distribution +0.9%) with average monthly 1‑hour peak transmission demand +0.8%; OM&A was down ~0.9% (transmission costs +3.1%, distribution costs −5%), depreciation/amortization/asset removal +3.4%, interest expense +8%, income tax expense $41M (vs. $68M) and an effective tax rate of 9.4% (vs. 15.9%); capital invested in Q1 was $715M (−2.7% y/y) with $484M placed in service (+14.4% overall; transmission in‑service +39%, distribution in‑service −4.3%); broadband is expected to add roughly $300–$700M to rate base when in service (impacting earnings in the back half of this year and into next), FFO/net debt was 13.9% at March 31, 2026, the OEB denied recovery of $69M of storm (Z‑factor) costs (management says this does not change guidance), Hydro One has 15 transmission lines under development/construction and plans to file its joint rate application on or before October 1, 2026.Hydro One Financial Statement Overview
Summary
Income Statement
78
Positive
Balance Sheet
63
Positive
Cash Flow
47
Neutral
| Breakdown | TTM | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 9.28B | 9.04B | 8.48B | 7.84B | 7.78B | 7.22B |
| Gross Profit | 2.54B | 2.24B | 1.97B | 1.84B | 1.83B | 1.61B |
| EBITDA | 3.36B | 3.35B | 3.06B | 2.85B | 2.81B | 2.52B |
| Net Income | 1.37B | 1.34B | 1.16B | 1.08B | 1.05B | 965.00M |
Balance Sheet | ||||||
| Total Assets | 39.72B | 39.67B | 36.68B | 32.85B | 31.46B | 30.38B |
| Cash, Cash Equivalents and Short-Term Investments | 37.00M | 549.00M | 716.00M | 79.00M | 530.00M | 540.00M |
| Total Debt | 19.16B | 19.19B | 17.73B | 15.74B | 15.19B | 14.72B |
| Total Liabilities | 26.76B | 26.93B | 24.51B | 21.09B | 20.07B | 19.41B |
| Stockholders Equity | 12.84B | 12.65B | 12.09B | 11.68B | 11.31B | 10.89B |
Cash Flow | ||||||
| Free Cash Flow | -464.00M | -275.00M | -274.00M | 67.00M | 174.00M | 78.00M |
| Operating Cash Flow | 2.58B | 2.69B | 2.53B | 2.41B | 2.26B | 2.15B |
| Investing Cash Flow | -3.23B | -3.50B | -3.13B | -2.69B | -2.07B | -2.06B |
| Financing Cash Flow | 566.00M | 636.00M | 1.23B | -172.00M | -197.00M | -303.00M |
Hydro One Technical Analysis
Negative
58.30
Price Trends
58.24
Negative
56.95
Negative
54.01
Positive
Market Momentum
>-0.01
Positive
36.52
Neutral
34.62
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:H, the sentiment is Negative. The current price of 58.3 is below the 20-day moving average (MA) of 58.65, above the 50-day MA of 58.24, and above the 200-day MA of 54.01, indicating a neutral trend. The MACD of >-0.01 indicates Positive momentum. The RSI at 36.52 is Neutral, neither overbought nor oversold. The STOCH value of 34.62 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for TSE:H.
Hydro One Peers Comparison
UnderperformOutperform
Sector (66)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
66 Neutral | $17.65B | 18.10 | 5.60% | 3.62% | 6.62% | 11.55% | |
65 Neutral | C$39.26B | 21.51 | 7.51% | 3.50% | 4.14% | 2.58% | |
64 Neutral | C$34.81B | 24.79 | 10.87% | 2.43% | 6.36% | 12.30% | |
64 Neutral | C$13.76B | 126.16 | 1.59% | 4.33% | -1.26% | -92.43% | |
56 Neutral | C$22.03B | 20.44 | 7.90% | 4.33% | 16.86% | 11.69% | |
53 Neutral | C$6.30B | 26.88 | 3.63% | 4.32% | 1.84% | ― |
* Utilities Sector Average
TSE:H
Hydro One
56.70
7.45
15.12%
TSE:CU
Canadian Utilities A
49.60
12.85
34.95%
TSE:AQN
Algonquin Power & Utilities
8.16
0.97
13.48%
TSE:FTS
Fortis
76.26
11.47
17.70%
TSE:EMA
Emera
72.10
11.84
19.65%
Hydro One Corporate Events
Business Operations and StrategyLegal Proceedings
Hydro One Denied $223 Million Storm Cost Recovery by Ontario Regulator
Negative
Apr 8, 2026
Hydro One Networks Inc. has received a decision from the Ontario Energy Board on its 2026 Annual Update application that denies recovery of approximately $223 million in costs tied to a major ice storm in March 2025. The storm inflicted widespread...
Business Operations and StrategyExecutive/Board Changes
Hydro One Taps COO Megan Telford as Next CEO in Planned 2026 Leadership Transition
Positive
Feb 26, 2026
Hydro One has announced a planned leadership transition, with President and CEO David Lebeter set to retire on June 9, 2026, and remain as a special advisor until October 10, 2026, while current Chief Operating Officer Megan Telford will assume th...
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.