Hydro One (H) AI Stock Analysis

• Market Cap: C$32.29B
• Dividend Yield: 2.43%
• Average Volume (3M): 1.16M
• Price to Earnings (P/E): 24.8
• Beta (1Y): 0.14
• 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: 599,781,800
• 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: -0.80% Downside
• Rating Consensus: Hold
• Number of Analyst Covering: 5
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 73 Outperform
• Price Target: C$59.00 ▲(9.60% Upside)

Hydro One's overall score is driven by strong financial performance and positive earnings call highlights, including revenue growth and strategic investments. However, cash flow challenges and a high P/E ratio suggest caution. Technical indicators support a positive trend, but valuation concerns may limit upside potential.

Positive Factors

Revenue Growth

Consistent revenue growth in both transmission and distribution segments indicates strong market demand and effective pricing strategies, supporting long-term financial stability.

Strategic Investments

Significant investments in infrastructure projects like the St. Clair transmission line enhance grid resilience and capacity, positioning the company for future growth.

Management Quality

Recognition as Company of the Year reflects strong leadership and operational excellence, fostering trust and confidence among stakeholders and supporting long-term success.

Negative Factors

Cash Flow Challenges

Negative free cash flow growth indicates potential difficulties in converting income into cash, which could impact the company's ability to fund operations and investments sustainably.

Increased Expenses

Rising expenses due to asset growth and debt can pressure margins and profitability, potentially limiting financial flexibility and impacting long-term financial health.

Debt Issuance Considerations

Issuing debt in U.S. markets introduces currency and interest rate risks, which could increase financing costs and affect the company's financial stability over time.

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 shows strong revenue growth and profitability margins, with a stable balance sheet typical for its industry. However, challenges in cash flow management, particularly negative free cash flow, slightly dampen the overall financial performance.

Income Statement

Hydro One demonstrates a strong income statement with consistent revenue growth, evidenced by a 12.21% increase in TTM. The company maintains healthy margins, with a gross profit margin of 24.14% and a net profit margin of 14.34% in TTM. The EBIT and EBITDA margins are robust at 24.35% and 36.91%, respectively, indicating efficient operational management. Overall, the income statement reflects a stable and growing financial performance.

Balance Sheet

The balance sheet of Hydro One shows a moderate level of leverage with a debt-to-equity ratio of 1.46 in TTM, which is typical for the regulated electric industry. The return on equity is solid at 10.29%, reflecting effective use of equity to generate profits. The equity ratio stands at 32.54%, indicating a balanced capital structure. While the leverage is slightly high, the company's equity position remains strong.

Cash Flow

Hydro One's cash flow statement reveals some challenges, particularly with negative free cash flow growth of -14.71% in TTM. The operating cash flow to net income ratio is 0.56, suggesting moderate cash generation relative to net income. The free cash flow to net income ratio is negative, indicating potential issues in converting income into free cash flow. While operating cash flow remains stable, the negative free cash flow warrants attention.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	8.87B	8.48B	7.84B	7.78B	7.22B	7.29B
Gross Profit	2.45B	1.97B	1.84B	1.83B	1.61B	1.48B
EBITDA	3.27B	3.06B	2.85B	2.81B	2.52B	2.36B
Net Income	1.31B	1.16B	1.08B	1.05B	965.00M	1.79B
Balance Sheet
Total Assets	38.77B	36.68B	32.85B	31.46B	30.38B	30.29B
Cash, Cash Equivalents and Short-Term Investments	412.00M	716.00M	79.00M	530.00M	540.00M	757.00M
Total Debt	18.80B	17.73B	15.74B	15.19B	14.72B	14.41B
Total Liabilities	26.05B	24.51B	21.09B	20.07B	19.41B	19.67B
Stockholders Equity	12.61B	12.09B	11.68B	11.31B	10.89B	10.53B
Cash Flow
Free Cash Flow	-342.00M	-274.00M	67.00M	174.00M	78.00M	186.00M
Operating Cash Flow	2.53B	2.53B	2.41B	2.26B	2.15B	2.03B
Investing Cash Flow	-3.41B	-3.13B	-2.69B	-2.07B	-2.06B	-1.97B
Financing Cash Flow	1.04B	1.23B	-172.00M	-197.00M	-303.00M	665.00M

Hydro One Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 53.83
• 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 53.83 is above the 20-day moving average (MA) of 53.45, above the 50-day MA of 53.56, and above the 200-day MA of 50.62, indicating a bullish trend. The MACD of 0.04 indicates Negative momentum. The RSI at 54.98 is Neutral, neither overbought nor oversold. The STOCH value of 72.49 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	73 Outperform	C$32.29B	24.75	10.58%	2.43%	5.98%	14.79%
CU	72 Outperform	C$11.98B	22.42	8.84%	4.33%	-0.94%	25.64%
EMA	69 Neutral	$20.36B	18.28	8.83%	4.33%	14.10%	65.76%
Sector *	66 Neutral	$17.65B	18.10	5.60%	3.62%	6.62%	11.55%
FTS	61 Neutral	C$36.69B	21.57	7.42%	3.50%	5.21%	4.27%
BEP.UN	58 Neutral	$27.79B	-105.62	4.66%	5.56%	14.78%	-9.37%
AQN	54 Neutral	$6.87B	-163.44	2.04%	4.32%	-4.72%	96.98%

Hydro One Corporate Events

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.

Hydro One Plans $311 Million Transmission Line to Boost Niagara Region’s Power Capacity

Hydro One Networks Inc. has filed an application with the Ontario Energy Board to construct a new 230-kilovolt transmission line in the Niagara Region, with an investment of approximately $311 million. This project, expected to be completed by 2029, aims to enhance the capacity and reliability of the electricity grid, supporting local businesses and industries. The initiative also includes a partnership model offering First Nations a 50% equity stake, aligning with Hydro One’s strategic focus on growth and collaboration with indigenous communities.

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.