Hydro One (H) AI Stock Analysis

• Market Cap: C$30.98B
• Dividend Yield: 2.42%
• Average Volume (3M): 1.16M
• Price to Earnings (P/E): 24.7
• Beta (1Y): 0.29
• Revenue Growth: 5.98%
• EPS Growth: 14.79%
• Country: CA
• Employees: 7,261
• Sector: Utilities
• Sector Strength: 65
• Industry: Regulated Electric
• EPS (TTM): 0.70
• Shares Outstanding: 599,777,160
• 10 Day Avg. Volume: 877,316
• 30 Day Avg. Volume: 1,163,016
• PEG Ratio: 3.46
• Price to Book (P/B): 2.19
• Price to Sales (P/S): 3.13
• P/FCF Ratio: -96.84
• 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$53.40
• Price Target Upside: -0.34% Downside
• Rating Consensus: Hold
• Number of Analyst Covering: 5
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 75 Outperform
• Price Target: C$59.00 ▲(10.12% Upside)

Hydro One's strong financial performance and positive technical indicators are the most significant factors driving the score. The company's robust revenue growth and stable profitability are complemented by a positive market trend. However, high leverage and valuation concerns slightly offset these strengths. The earnings call provided additional confidence with positive guidance and strategic investments, despite some noted challenges.

Positive Factors

Revenue Growth

Sustained revenue growth in both transmission and distribution segments indicates strong demand and effective market positioning, supporting long-term financial health.

Infrastructure Investment

Significant investments in infrastructure enhance grid resilience and capacity, positioning Hydro One for future growth and integration of renewable energy.

Earnings Growth Guidance

Projected earnings growth reflects strategic planning and operational efficiency, enhancing investor confidence and supporting long-term value creation.

Negative Factors

High Leverage

High leverage can limit financial flexibility and increase risk, especially if interest rates rise or cash flow generation weakens, impacting long-term stability.

Negative Free Cash Flow

Negative free cash flow suggests difficulty in covering capital expenditures, which could constrain future investment and growth opportunities if not addressed.

Increased Expenses

Rising expenses can erode profitability and strain margins, necessitating careful cost management to maintain financial health and competitive positioning.

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

Hydro One demonstrates strong revenue growth and stable profitability, supported by solid operational margins. While the balance sheet shows high leverage, the company maintains a reasonable return on equity. Cash flow management requires attention due to negative free cash flow, but operating cash flow remains robust. Overall, the company is in a strong financial position with some areas needing careful monitoring.

Income Statement

Hydro One has shown strong revenue growth with a 40.1% increase in the TTM period, indicating robust demand and operational efficiency. The gross profit margin is healthy at 32.98%, though slightly lower than previous periods. Net profit margin remains stable at 13.99%, reflecting consistent profitability. EBIT and EBITDA margins are solid, showcasing effective cost management and operational leverage.

Balance Sheet

The company's debt-to-equity ratio is relatively high at 1.45, indicating significant leverage, which could pose risks if not managed carefully. However, the return on equity is decent at 10.10%, suggesting effective use of equity capital. The equity ratio is stable, reflecting a balanced asset structure.

Cash Flow

Operating cash flow is strong, but the free cash flow is negative, indicating potential challenges in covering capital expenditures. The operating cash flow to net income ratio is healthy, showing good cash generation relative to net income. However, the negative free cash flow to net income ratio highlights the need for careful cash management.

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	2.12B	1.97B	1.84B	1.83B	1.61B	1.48B
EBITDA	3.23B	3.06B	2.85B	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	67.00M	174.00M	78.00M	186.00M
Operating Cash Flow	2.44B	2.53B	2.41B	2.26B	2.15B	2.03B
Investing Cash Flow	-3.38B	-3.13B	-2.69B	-2.07B	-2.06B	-1.97B
Financing Cash Flow	941.00M	1.23B	-172.00M	-197.00M	-303.00M	665.00M

Hydro One Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 53.58
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: Negative

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 53.58 is above the 20-day moving average (MA) of 52.43, above the 50-day MA of 50.93, and above the 200-day MA of 49.09, indicating a bullish trend. The MACD of 0.72 indicates Negative momentum. The RSI at 64.73 is Neutral, neither overbought nor oversold. The STOCH value of 84.89 is Negative, 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
FTS	76 Outperform	$37.03B	21.77	7.42%	3.43%	5.21%	4.27%
H	75 Outperform	C$30.98B	24.70	10.58%	2.42%	5.98%	14.79%
EMA	73 Outperform	$20.68B	18.63	8.83%	5.03%	14.10%	65.76%
CU	67 Neutral	C$10.72B	24.01	8.84%	4.35%	-0.94%	25.64%
Sector *	66 Neutral	$17.65B	18.10	5.60%	3.62%	6.62%	11.55%
CPX	61 Neutral	C$10.87B	24.81	9.40%	3.73%	-2.99%	-32.11%
BEP.UN	58 Neutral	$26.91B	―	-5.58%	4.79%	14.78%	-9.37%

Hydro One Corporate Events

Hydro One Reports Strong Q3 2025 Financial Results

Hydro One Limited released its unaudited interim consolidated financial statements for the three and nine months ended September 30, 2025, showing a notable increase in revenues and net income compared to the previous year. The company’s revenues for the third quarter rose to CAD 2,299 million from CAD 2,192 million in 2024, while net income increased to CAD 425 million from CAD 374 million. This financial performance highlights Hydro One’s strong operational efficiency and market position, which is crucial for stakeholders as it reflects the company’s ability to generate consistent returns.

The most recent analyst rating on (TSE:H) stock is a Hold with a C$53.00 price target. To see the full list of analyst forecasts on Hydro One stock, see the TSE:H Stock Forecast page.

Hydro One Reports Strong Q3 Results and Advances Key Infrastructure Projects

Hydro One Limited announced its third-quarter financial results for 2025, reporting an increase in earnings per share to $0.70 from $0.62 in the same period last year, driven by higher revenues due to Ontario Energy Board-approved rates and increased demand. The company also highlighted its involvement in the St. Clair Transmission Line Project, a significant infrastructure development in southwestern Ontario, and its community engagement efforts, including a $2.1 million donation campaign and recognition of Indigenous communities and organizations. Hydro One’s ongoing investments in infrastructure aim to enhance the reliability of Ontario’s electricity system, with $779 million invested in the third quarter alone.

The most recent analyst rating on (TSE:H) stock is a Hold with a C$53.00 price target. To see the full list of analyst forecasts on Hydro One stock, see the TSE:H Stock Forecast page.

Hydro One’s Earnings Call Highlights Growth Amid Challenges

Hydro One’s recent earnings call painted a picture of robust financial health, marked by impressive revenue and earnings per share growth. The company is on a promising trajectory with strategic transmission projects and positive recognitions enhancing its forward momentum. However, challenges such as the financial impacts of the March 2025 ice storm and increased expenses due to debt and taxes were also highlighted, presenting potential areas of concern for stakeholders.

Hydro One Inc. Announces $1.1 Billion Sustainable Notes Offering

Hydro One Inc., a subsidiary of Hydro One Limited, has announced the pricing of a $1.1 billion offering of Medium Term Notes under its Sustainable Financing Framework. The proceeds from this issuance will be allocated to finance or refinance eligible green projects, although it is not a default event if the allocation does not occur. This move underscores Hydro One’s commitment to sustainable investment, potentially enhancing its industry positioning and offering implications for stakeholders interested in green energy initiatives.

The most recent analyst rating on (TSE:H) stock is a Buy 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 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.