Hydro One Limited (TSE:H)
TSX:H
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Hydro One
(TSX:H)
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Rating:67Neutral
Price Target:
C$61.00
▲(5.34% Upside)
Action:DowngradedDate: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.
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.
Read all positive and negative factors
Positive Factors
Negative 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.
Read all positive factors
Hydro One (H) vs. iShares MSCI Canada ETF (EWC)
Market Cap
C$34.73B
Dividend Yield2.43%
Average Volume (3M)1.16M
Price to Earnings (P/E)24.5
Beta (1Y)0.22
Revenue Growth5.98%
EPS Growth14.79%
CountryCA
Employees7,261
SectorUtilities
Sector Strength65
IndustryRegulated Electric
Share Statistics
EPS (TTM)0.39
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$57.17Price Target Upside-1.28% Downside
Rating ConsensusHold
Number of Analyst Covering6
EPS Forecast (FY)2.26
Revenue Forecast (FY)C$9.27B
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 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 strea...
Hydro One Earnings Call Summary
Earnings Call Date:Feb 13, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:May 01, 2026
Earnings Call Sentiment Positive
The call conveyed predominantly positive operational and financial momentum: strong EPS and net income growth, sizable productivity savings ($254M) with $166M passed to customers, successful capital deployment ($3.4B capex; $2.9B placed in service) and notable project designations and First Nations partnership progress. Offsetting items include near‑term revenue declines (net of purchased power) driven by regulatory adjustments and earnings sharing, higher interest and tax expenses, and the fact that much incremental capex is not yet in service (limiting immediate earnings impact). Regulatory and competitive uncertainty and weather‑related operational risks remain notable but manageable based on current commentary.Positive Updates
Earnings Per Share and Net Income Growth
Q4 basic EPS of $0.39 vs $0.33 prior year; full-year EPS $2.23 vs $1.93 in 2024. Net income increased 16.5% in the quarter and 15.8% for the full year, driven by volume growth, OEB‑approved 2025 rates and lower OM&A.
Negative Updates
Revenue Decline Net of Purchased Power in Q4
Revenue, net of purchased power, decreased 5.2% year‑over‑year in Q4. Transmission revenues fell 2.8% and Distribution revenues fell 10.1%, primarily due to regulatory adjustments including higher earnings sharing and lower mutual storm assistance recoveries.
Read all updates
Q4-2025 Updates
Positive
Negative
Earnings Per Share and Net Income Growth
Q4 basic EPS of $0.39 vs $0.33 prior year; full-year EPS $2.23 vs $1.93 in 2024. Net income increased 16.5% in the quarter and 15.8% for the full year, driven by volume growth, OEB‑approved 2025 rates and lower OM&A.
Read all positive updates
Company Guidance
Hydro One reiterated that EPS is expected to grow 6–8% annually for the current rate period using normalized 2022 EPS of $1.61 as the base, and said it will stick to its previously published guidance despite elevated capital deployment; management expects an effective tax rate of about 13–16% for the remainder of the JRAP '23 period. The outlook is supported by 2025 results (FY EPS $2.23 vs $1.93 in 2024; Q4 EPS $0.39 vs $0.33; net income +16.5% Q/Q and +15.8% FY/FY), balance‑sheet metrics (FFO/net debt 14.2%), and continued investment and financing activity (2025 capex ≈ $3.4B; Q4 capex $939M +17.5% YoY; assets placed in service ≈ $2.9B for the year and $1.3B in Q4 +19.1% YoY). Management noted financing completed under its sustainable framework (≈ $2.7B medium‑term notes in 2025, including $1.2B at 3.9% due 2033 and $400M at 4.8% due 2056), a Q4 interest‑expense increase of ~10.8% YoY but only limited expected EPS drag from incremental interest, a declared dividend of $0.3331 per share (record March 11, 2026), and ongoing productivity delivery (~$254M savings in 2025, with ~$166M returned to customers).Hydro One Financial Statement Overview
Summary
Income Statement
78
Positive
Balance Sheet
62
Positive
Cash Flow
46
Neutral
| 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
Positive
57.91
Price Trends
56.52
Positive
54.82
Positive
51.96
Positive
Market Momentum
0.12
Positive
52.78
Neutral
44.16
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 57.91 is below the 20-day moving average (MA) of 58.29, above the 50-day MA of 56.52, and above the 200-day MA of 51.96, indicating a neutral trend. The MACD of 0.12 indicates Positive momentum. The RSI at 52.78 is Neutral, neither overbought nor oversold. The STOCH value of 44.16 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
UnderperformOutperform
Sector (66)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
67 Neutral | C$34.73B | 24.47 | 10.73% | 2.43% | 5.98% | 14.79% | |
66 Neutral | $17.65B | 18.10 | 5.60% | 3.62% | 6.62% | 11.55% | |
63 Neutral | C$39.67B | 19.97 | 7.51% | 3.50% | 5.21% | 4.27% | |
63 Neutral | C$21.98B | 18.58 | 8.83% | 4.33% | 14.10% | 65.76% | |
58 Neutral | C$31.51B | -400.32 | 2.67% | 5.56% | 14.78% | -9.37% | |
58 Neutral | C$13.30B | 97.60 | 8.84% | 4.33% | -0.94% | 25.64% | |
51 Neutral | C$6.66B | 25.55 | 3.88% | 4.32% | -4.72% | 96.98% |
* Utilities Sector Average
TSE:H
Hydro One
57.91
8.82
17.97%
TSE:BEP.UN
Brookfield Renewable Partners
46.07
16.11
53.78%
TSE:CU
Canadian Utilities A
48.88
12.67
34.97%
TSE:AQN
Algonquin Power & Utilities
8.66
1.79
26.13%
TSE:FTS
Fortis
78.18
13.81
21.46%
TSE:EMA
Emera
72.55
13.01
21.85%
Hydro One Corporate Events
Business Operations and Strategy
Ontario Taps Hydro One for Major Sudbury–Barrie Transmission Expansion
Positive
Feb 9, 2026
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-servi...
Business Operations and Strategy
Ontario Taps Hydro One and First Nations to Build Greenstone Transmission Line for Northern Growth
Positive
Jan 28, 2026
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 ...
Business Operations and Strategy
Hydro One Reaches Tentative Labour Deal With Professional Staff Union
Positive
Jan 13, 2026
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 ratifica...
Business Operations and Strategy
Hydro One to Develop Key Transmission Line with First Nations Partnership
Positive
Nov 24, 2025
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 bro...
Business Operations and StrategyPrivate Placements and Financing
Hydro One Inc. Prices $1.6 Billion in Sustainable Medium Term Notes
Positive
Nov 19, 2025
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, refl...
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.