Hydro One (H) AI Stock Analysis

• Market Cap: C$29.39B
• Dividend Yield: 2.6%
• Average Volume (3M): 735.86K
• Price to Earnings (P/E): 24.1
• Beta (1Y): 0.40
• Revenue Growth: 9.95%
• EPS Growth: 11.34%
• Country: CA
• Employees: 7,261
• Sector: Utilities
• Sector Strength: 80
• Industry: Regulated Electric
• EPS (TTM): 0.60
• Shares Outstanding: 599,775,300
• 10 Day Avg. Volume: 728,727
• 30 Day Avg. Volume: 735,863
• PEG Ratio: 4.18
• Price to Book (P/B): 2.37
• Price to Sales (P/S): 0.00
• P/FCF Ratio: -144.12
• 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$52.80
• Price Target Upside: 7.76% Upside
• Rating Consensus: Hold
• Number of Analyst Covering: 5

• Rating: 70 Outperform
• Price Target: C$54.00 ▲(10.20%Upside)

Hydro One's overall score reflects robust financial health with consistent revenue growth and sound profitability. The positive impact of recent corporate events and strong earnings guidance supports the score. However, valuation concerns and technical indicators suggest cautious optimism. The company's ability to manage capital expenditures and regulatory challenges will be key to sustaining its performance.

Positive Factors

Earnings Growth

Hydro One's EPS growth is expected to continue outpacing its rate base through 2027.

Financial Strategy

Newly appointed CFRO Harry Taylor reaffirmed the 5-7% EPS guidance through 2027, that no equity is required during that timeframe, and that the financial strategy will be unchanged.

Long-term Investment

Positive on the shares long term given the visible long-dated capex program, high-quality asset base, and strong balance sheet.

Negative Factors

Market Performance

The significant share outperformance vs. S&P/TSX Utilities Index, the premium P/E valuation of 21x, and the relative return to the unchanged $42 target drive the rating to Market Perform from Outperform.

Regulatory Uncertainty

There is uncertainty around the outcome of Hydro One's cost of capital review with the OEB, which could alter its ROE/equity layer.

Valuation

Hydro One shares are currently trading at a 35% premium to peers and are fully valued.

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 makes money primarily through regulated electricity transmission and distribution operations. As a regulated utility, its revenue is largely determined by rates set by the Ontario Energy Board (OEB), which reflects the costs of providing service plus an allowed rate of return. The company's revenue streams include transmission tariffs charged to electricity generators and distributors for using its network to transport electricity, and distribution charges to end-users for delivering electricity to homes and businesses. Hydro One also engages in ancillary services and other electricity-related businesses, which complement its core operations. The stability and predictability of its earnings are bolstered by the regulatory framework and its monopoly status in key service areas, making it a reliable income generator.

Hydro One Financial Statement Overview

Summary

Hydro One's financial statements reveal robust revenue growth and significant profitability margins, but are balanced by a high debt-to-equity ratio and negative free cash flow due to substantial capital expenditures. The company's overall financial health is solid, with a focus on managing capital spending to improve cash flow.

Income Statement

Hydro One's income statement shows a steady growth in total revenue over recent years, with a revenue growth rate of 2.85% in the TTM (Trailing-Twelve-Months). The gross profit margin is solid at 32.98%, although slightly decreasing from previous years. Net profit margin remains strong at 13.99%, demonstrating the company's profitability. The EBIT margin of 27.93% and EBITDA margin of 34.78% indicate efficient operational performance. Overall, the company's profitability and growth trends are positive, though slight margin compression warrants monitoring.

Balance Sheet

Hydro One maintains a moderate debt-to-equity ratio of 1.45, reflecting a balanced approach to leveraging. The return on equity (ROE) is a healthy 9.96%, indicating effective use of shareholder funds to generate profits. The equity ratio of 33.05% suggests a stable capital structure, although a higher ratio would be preferable. The balance sheet reflects stability, with consistent equity growth, but the high level of debt could pose risks if not managed carefully.

Cash Flow

The company's cash flow statement shows a decline in free cash flow, which is negative in the TTM period, indicating challenges in generating excess cash after capital expenditures. The operating cash flow to net income ratio is 2.11, showcasing strong cash generation relative to net income. However, the free cash flow to net income ratio is negative due to high capital expenditures. While operating cash flow remains robust, the negative free cash flow signals potential liquidity issues if capital spending continues at the current rate.

Breakdown	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	8.48B	7.84B	7.78B	7.22B	7.29B
Gross Profit	3.03B	2.84B	2.80B	2.53B	2.37B
EBITDA	2.89B	2.69B	2.81B	2.52B	2.36B
Net Income	1.16B	1.08B	1.05B	965.00M	1.79B
Balance Sheet
Total Assets	36.68B	32.85B	31.46B	30.38B	30.29B
Cash, Cash Equivalents and Short-Term Investments	716.00M	79.00M	530.00M	540.00M	757.00M
Total Debt	17.73B	15.74B	15.19B	14.72B	14.41B
Total Liabilities	24.51B	21.09B	20.07B	19.41B	19.67B
Stockholders Equity	12.09B	11.68B	11.31B	10.89B	10.53B
Cash Flow
Free Cash Flow	-274.00M	-64.00M	174.00M	78.00M	186.00M
Operating Cash Flow	2.53B	2.41B	2.26B	2.15B	2.03B
Investing Cash Flow	-3.13B	-2.69B	-2.07B	-2.06B	-1.98B
Financing Cash Flow	1.23B	-172.00M	-197.00M	-303.00M	674.00M

Hydro One Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 49.00
• 50DMA: Negative
• 100DMA: Negative
• 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 49 is above the 20-day moving average (MA) of 48.85, below the 50-day MA of 49.15, and above the 200-day MA of 46.80, indicating a neutral trend. The MACD of -0.05 indicates Negative momentum. The RSI at 51.33 is Neutral, neither overbought nor oversold. The STOCH value of 81.47 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
H	70 Outperform	C$29.39B	24.10	10.15%	2.60%	9.95%	11.34%
Sector *	60 Neutral	C$5.14B	-23.87	-19.26%	4.50%	12.16%	-71.33%
BEP	―	$17.75B	―	-5.97%	5.28%	―	―
CU	72 Outperform	C$7.92B	23.50	7.52%	4.72%	-0.51%	-17.17%
CPX	69 Neutral	C$9.01B	18.17	10.00%	4.49%	-16.83%	-37.24%
FTS	―	$24.38B	20.57	7.46%	3.55%	―	―
EMA	―	$13.99B	22.63	7.12%	1.12%	―	―

Hydro One Corporate Events

Hydro One Elects New Directors Amid Strong Shareholder Support

Hydro One Limited announced the election of nine directors at its Annual and Special Meeting of Shareholders, with a significant 84.12% of shares voted. All other matters at the meeting were approved, reflecting strong shareholder support. This election is pivotal for Hydro One as it continues to focus on maintaining its leadership in the electricity transmission and distribution sector, impacting its strategic direction and stakeholder relations.

The most recent analyst rating on (TSE:H) stock is a Hold with a C$45.00 price target. To see the full list of analyst forecasts on Hydro One stock, see the TSE:H Stock Forecast page.

Hydro One Limited Appoints Melissa Sonberg as New Chair of the Board

Hydro One Limited has appointed Melissa Sonberg as the new Chair of the Board of Directors, effective June 4, 2025. Sonberg, who has been a board member since 2018, brings extensive experience from her previous roles in healthcare, Air Canada, and AIMIA Inc. Her leadership is expected to guide Hydro One in its continued investment in a safe and reliable electricity system, crucial for Ontario’s growth and prosperity. The appointment comes at a pivotal time as the company focuses on enhancing its operations and supporting community development.

The most recent analyst rating on (TSE:H) stock is a Hold with a C$45.00 price target. To see the full list of analyst forecasts on Hydro One stock, see the TSE:H Stock Forecast page.

Hydro One and Power Workers’ Union Ratify New Collective Agreement

Hydro One Inc. and the Power Workers’ Union have successfully ratified a new collective agreement effective from October 1, 2025, to March 31, 2028, which unifies the main and Customer Service Organization agreements. This agreement, reached ahead of the expiration of the previous one, highlights positive relations between the parties and ensures continued stability and service delivery in Ontario.

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.

Hydro One’s 2024 Sustainability Report Highlights Strategic Growth and Environmental Initiatives

Hydro One has released its 2024 Sustainability Report, highlighting its strategic alignment with sustainability to support growth and meet the increasing energy needs of Ontarians. Key achievements include converting 44% of sedans and SUVs to EVs or hybrids, exceeding Indigenous business spending goals, establishing pollinator habitats, and securing the Wawa Timmins Power Line project with First Nations support. The report underscores Hydro One’s commitment to sustainable development and its role in fostering a robust energy infrastructure in Ontario.

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.

Hydro One Reports Strong Q1 2025 Results Amidst Operational Challenges

Hydro One Limited reported strong financial results for the first quarter of 2025, with a notable increase in earnings per share from $0.49 to $0.60 compared to the previous year. This growth was driven by higher revenues due to Ontario Energy Board-approved rates and increased peak demand. The company also completed a significant acquisition of a 48% interest in the East-West Tie Limited Partnership, enhancing its operational capabilities. In response to a severe ice storm, Hydro One successfully restored power to over 600,000 customers and launched a recovery grant to support affected communities. The company also reached a tentative settlement with the Power Workers’ Union and received accolades for its safety and sustainability efforts.

Hydro One and Power Workers’ Union Reach Tentative Agreements

Hydro One Inc. and the Power Workers’ Union have reached tentative agreements for two collective agreements covering front-line employees in Ontario, pending ratification by the union membership. These agreements, once ratified, will be effective from October 1, 2025, potentially ensuring operational stability and continued service reliability for Hydro One’s customers.