Hydro One (H) AI Stock Analysis

• Market Cap: C$34.99B
• Dividend Yield: 2.43%
• Average Volume (3M): 1.16M
• Price to Earnings (P/E): 24.5
• Beta (1Y): 0.17
• Revenue Growth: 5.98%
• EPS Growth: 14.79%
• Country: CA
• Employees: 7,261
• Sector: Utilities
• Sector Strength: 65
• Industry: Regulated Electric
• EPS (TTM): 0.39
• Shares Outstanding: 599,781,800
• 10 Day Avg. Volume: 877,316
• 30 Day Avg. Volume: 1,163,016
• PEG Ratio: 1.57
• Price to Book (P/B): 2.59
• Price to Sales (P/S): 3.62
• P/FCF Ratio: -119.15
• 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$55.17
• Price Target Upside: -5.17% Downside
• Rating Consensus: Hold
• Number of Analyst Covering: 6
• EPS Forecast (FY): 2.26
• Revenue Forecast (FY): C$9.26B

• Rating: 67 Neutral
• Price Target: C$61.00 ▲(4.85% Upside)
• Action: Downgraded Date: 02/18/26
• Date: Action: Downgraded 02/18/26

The score is driven primarily by mixed financial quality: strong profitability and operating cash generation are offset by negative recent free cash flow and gradually rising leverage. Technicals are supportive with an established uptrend, but momentum indicators are stretched. Valuation is a headwind given the higher P/E and only moderate yield, while the latest earnings call was a net positive due to reaffirmed growth guidance and solid execution despite interest-rate and regulatory pressures.

Positive Factors

Regulated business model

Hydro One's core regulated transmission and distribution franchises produce predictable, rate‑regulated cash flows under OEB frameworks. That structural revenue model supports multi-year planning, steady margins and reliable recovery of prudently incurred costs, enabling durable earnings visibility.

Rate‑base growth via capex

Sustained multi‑billion capital deployment with increasing in‑service additions expands Hydro One's regulated rate base. As projects are energized and enter rate base, they generate allowed returns, providing structural earnings growth and long‑term cash flow uplift beyond near‑term construction periods.

Productivity and customer alignment

Material productivity savings and explicit sharing with customers show operational discipline and regulatory alignment. Sustained efficiency gains help preserve regulated margins, reduce unit costs, and strengthen regulatory credibility, supporting rate outcomes and long‑run profitability.

Negative Factors

Rising leverage

Leverage has increased materially as Hydro One funds a large capex program with debt. Higher debt/equity reduces financial flexibility, raises interest expense sensitivity and limits capacity to absorb shocks or pursue opportunistic investments without raising rates, issuing equity, or increasing refinancing risk.

Negative free cash flow

Persistent negative free cash flow driven by elevated capex constrains internal funding for the growth program and dividend support. Ongoing FCF deficits increase reliance on external financing, elevating refinancing and interest‑rate risk if market conditions worsen over the medium term.

Regulatory & procurement uncertainty

Shifts in procurement policy and regulatory adjustments create structural execution and revenue risk. Competitive tendering and earnings‑sharing or cost recovery changes can delay or reduce allowed returns on new projects, affecting long‑term project win rates, timing of earnings recognition and margin stability.

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 approximately 30,000 circuit kilometers of high-voltage transmission lines and 125,000 circuit kilometers of primary low-voltage distribution network. It serves approximately 1.5 million residential, small business, commercial, and industrial customers. The company also provides telecommunications support services for its transmission and distribution businesses; and information and communications technology services and solutions. Hydro One Limited was incorporated in 2015 and is headquartered in Toronto, Canada.

How the Company Makes Money

Hydro One generates revenue primarily through the transmission and distribution of electricity. The company earns money by charging customers for the electricity they use, based on regulated rates set by the Ontario Energy Board. Key revenue streams include transmission charges from utilities and large industrial clients, as well as distribution charges from residential and small business customers. Hydro One also benefits from cost recovery mechanisms that allow it to recover investments in infrastructure and operational costs. Additionally, the company engages in partnerships with renewable energy developers and other stakeholders, which can provide supplemental revenue opportunities through collaborative projects and grid enhancements.

Hydro One Financial Statement Overview

Summary

Income statement strength (Score 78) reflects accelerating revenue growth and stable utility-level margins, but balance-sheet leverage is a constraint (Score 62; debt-to-equity ~1.52 in 2025). Cash flow is the key weakness (Score 46) with negative free cash flow in 2024–2025, reducing financial flexibility despite positive operating cash flow.

Income Statement

Revenue has trended higher over the period, accelerating into 2025 (annual revenue growth of ~195%). Profitability is solid and fairly stable for a regulated utility, with net margins in the mid-teens recently (2025 ~14.8% vs. 2024 ~13.6%) and healthy EBITDA margins around ~36–37%. A notable weakness is the sharp drop in net margin versus 2020 (~24.5%), indicating earnings normalization and less favorable comparability versus that peak year.

Balance Sheet

The company operates with meaningful leverage, with debt-to-equity rising to ~1.52 in 2025 (up from ~1.35–1.47 in prior years) and total debt increasing over time. Equity has grown, but not enough to offset the upward move in leverage. Return on equity (where provided) is steady but moderate for a utility (~9–10% in 2022–2024), supporting balance-sheet durability, though the leverage profile remains a key constraint.

Cash Flow

Operating cash flow is consistently positive and growing (about $2.15B in 2021 to ~$2.70B in 2025), but free cash flow has been pressured: positive in 2022–2023 and negative in 2024–2025 (about -$274M to -$275M). Free cash flow relative to net income turned negative in the last two years, signaling heavier capital spending and/or working-capital needs. Cash flow coverage is mixed (roughly ~0.62–0.89 across years), which reduces flexibility if negative free cash flow persists.

Breakdown	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	9.04B	8.48B	7.84B	7.78B	7.22B
Gross Profit	2.24B	1.97B	1.84B	1.83B	1.61B
EBITDA	3.35B	3.06B	2.85B	2.81B	2.52B
Net Income	1.34B	1.16B	1.08B	1.05B	965.00M
Balance Sheet
Total Assets	39.67B	36.68B	32.85B	31.46B	30.38B
Cash, Cash Equivalents and Short-Term Investments	549.00M	716.00M	79.00M	530.00M	540.00M
Total Debt	19.19B	17.73B	15.74B	15.19B	14.72B
Total Liabilities	26.93B	24.51B	21.09B	20.07B	19.41B
Stockholders Equity	12.65B	12.09B	11.68B	11.31B	10.89B
Cash Flow
Free Cash Flow	-275.00M	-274.00M	67.00M	174.00M	78.00M
Operating Cash Flow	2.69B	2.53B	2.41B	2.26B	2.15B
Investing Cash Flow	-3.50B	-3.13B	-2.69B	-2.07B	-2.06B
Financing Cash Flow	636.00M	1.23B	-172.00M	-197.00M	-303.00M

Hydro One Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 58.18
• 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 58.18 is above the 20-day moving average (MA) of 56.68, above the 50-day MA of 54.88, and above the 200-day MA of 51.31, indicating a bullish trend. The MACD of 1.12 indicates Negative momentum. The RSI at 68.38 is Neutral, neither overbought nor oversold. The STOCH value of 70.20 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	67 Neutral	C$34.99B	24.47	10.58%	2.43%	5.98%	14.79%
Sector *	66 Neutral	$17.65B	18.10	5.60%	3.62%	6.62%	11.55%
EMA	65 Neutral	C$21.35B	18.58	8.83%	4.33%	14.10%	65.76%
FTS	64 Neutral	C$39.95B	19.97	7.58%	3.50%	5.21%	4.27%
BEP.UN	58 Neutral	$28.42B	-400.32	-0.84%	5.56%	14.78%	-9.37%
CU	58 Neutral	C$13.04B	97.60	8.84%	4.33%	-0.94%	25.64%
AQN	54 Neutral	$7.30B	26.51	2.04%	4.32%	-4.72%	96.98%

Hydro One Corporate Events

Ontario Taps Hydro One for Major Sudbury–Barrie Transmission Expansion

Ontario has selected Hydro One Networks Inc. to develop and construct a new 500-kilovolt transmission line spanning about 300 kilometres between Sudbury’s Hanmer Transformer Station and the Essa station near Barrie, with an expected in-service date of 2032. The designation also directs Hydro One to complete development work for a future second 500-kV line to support new generation in northern Ontario and bolster long-term grid reliability.

The project will be developed under Hydro One’s First Nation Equity Partnership Model, giving proximate First Nations the opportunity to acquire a 50 per cent equity stake in the transmission line component. Provincial ministers and First Nations leaders framed the initiative as critical to meeting surging electricity demand, supporting up to 40 new mines, advancing Indigenous economic self-reliance, and strengthening Ontario’s north-south energy corridor using largely made-in-Canada materials.

The most recent analyst rating on (TSE:H) stock is a Hold with a C$50.00 price target. To see the full list of analyst forecasts on Hydro One stock, see the TSE:H Stock Forecast page.

Ontario Taps Hydro One and First Nations to Build Greenstone Transmission Line for Northern Growth

Ontario has designated Hydro One to develop and construct the Greenstone Transmission Line, a new 230-kilovolt corridor in the province’s far north that will connect the existing East-West Tie near Nipigon Bay to Longlac Transformer Station and extend toward Aroland First Nation, with in-service targeted for 2032. The project, developed under Hydro One’s 50-50 equity partnership model with proximate First Nations, is intended to boost capacity and reliability for northern communities, enable Indigenous equity ownership in major infrastructure, and underpin economic growth linked to mining and critical minerals in the Ring of Fire region, positioning the line as a backbone asset for both local development and Ontario’s broader resource strategy.

The most recent analyst rating on (TSE:H) stock is a Hold with a C$57.00 price target. To see the full list of analyst forecasts on Hydro One stock, see the TSE:H Stock Forecast page.

Hydro One Reaches Tentative Labour Deal With Professional Staff Union

Hydro One Networks Inc. has reached a tentative collective agreement with the Society of United Professionals, covering engineering, supervisory and other professional employees across its Ontario operations. The deal, which is subject to ratification by Society members, would be effective retroactively from October 1, 2025 if approved, reducing near-term labour uncertainty for the utility and helping support operational stability across its transmission and distribution network.

The most recent analyst rating on (TSE:H) stock is a Hold with a C$56.00 price target. To see the full list of analyst forecasts on Hydro One stock, see the TSE:H Stock Forecast page.

Hydro One to Develop Key Transmission Line with First Nations Partnership

Hydro One has been selected by the Ontario government to develop a new priority transmission line between Bowmanville and the Greater Toronto Area, in partnership with First Nations, allowing them a 50% equity stake. This initiative, part of a broader plan to meet growing energy demands, is expected to bolster Ontario’s economy, create jobs, and ensure a reliable electricity supply, particularly benefiting sectors like greenhouses, manufacturing, and energy.

The most recent analyst rating on (TSE:H) stock is a Hold with a C$54.00 price target. To see the full list of analyst forecasts on Hydro One stock, see the TSE:H Stock Forecast page.

Hydro One Inc. Prices $1.6 Billion in Sustainable Medium Term Notes

Hydro One Inc., a subsidiary of Hydro One Limited, has announced the pricing of a $1.6 billion offering of Medium Term Notes under its Sustainable Financing Framework. The proceeds will be used to finance or refinance eligible green projects, reflecting Hydro One’s commitment to sustainability. The offering, expected to close on November 21, 2025, highlights Hydro One’s strategic focus on sustainable investments and its positioning as a leader in green financing within the energy sector.

The most recent analyst rating on (TSE:H) stock is a Hold with a C$54.00 price target. To see the full list of analyst forecasts on Hydro One stock, see the TSE:H Stock Forecast page.