Hydro One (H) AI Stock Analysis

• Market Cap: C$29.50B
• Dividend Yield: 2.71%
• Average Volume (3M): 1.16M
• Price to Earnings (P/E): 24.2
• Beta (1Y): 0.42
• Revenue Growth: 9.95%
• EPS Growth: 11.34%
• Country: CA
• Employees: 7,261
• Sector: Utilities
• Sector Strength: 78
• Industry: Regulated Electric
• EPS (TTM): 0.60
• Shares Outstanding: 599,775,200
• 10 Day Avg. Volume: 1,655,658
• 30 Day Avg. Volume: 1,162,032
• PEG Ratio: 2.38
• Price to Book (P/B): 1.92
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 124.78
• 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$52.40
• Price Target Upside: 7.93% Upside
• Rating Consensus: Hold
• Number of Analyst Covering: 5

• Rating: 67 Neutral
• Price Target: C$54.00 ▲(11.23%Upside)

Hydro One's strong earnings growth and positive corporate developments are significant strengths, offset by technical indicators showing bearish trends and valuation concerns due to a high P/E ratio. The company's strategic initiatives and stable dividend provide a balanced outlook.

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 the transmission and distribution of electricity. The company generates revenue by charging regulated rates to customers for the delivery of electricity. These rates are overseen and approved by the Ontario Energy Board (OEB) to ensure fair pricing. Hydro One's revenue streams are largely stable and predictable due to the regulatory environment, which allows for cost recovery and a return on equity. Additionally, the company may engage in partnerships or agreements with other utilities or energy providers to enhance its service offerings and operational efficiency. However, its core income is derived from the regulated transmission and distribution services it provides.

Hydro One Financial Statement Overview

Summary

Hydro One demonstrates solid financial health with consistent revenue growth and strong profitability margins. However, the balance sheet shows a moderate level of leverage, and cash flow generation is impacted by high capital expenditures leading to negative free 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
TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
8.73B	8.48B	7.84B	7.78B	7.22B	7.29B
	Gross Profit
2.88B	3.03B	2.84B	2.80B	2.53B	2.37B
	EBIT
2.44B	2.12B	1.99B	1.96B	1.72B	1.57B
	EBITDA
3.04B	2.89B	2.69B	2.81B	2.52B	2.36B
	Net Income Common Stockholders
1.22B	1.16B	1.08B	1.05B	965.00M	1.79B
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
123.00M	716.00M	79.00M	530.00M	540.00M	757.00M
	Total Assets
37.09B	36.68B	32.85B	31.46B	30.38B	30.29B
	Total Debt
17.79B	17.73B	15.74B	15.19B	14.72B	14.41B
	Net Debt
17.67B	17.02B	15.66B	14.66B	14.19B	13.66B
	Total Liabilities
24.75B	24.51B	21.09B	20.07B	19.41B	19.67B
	Stockholders Equity
12.26B	12.09B	11.68B	11.31B	10.89B	10.53B
Cash Flow		Free Cash Flow
-202.00M	-274.00M	-64.00M	174.00M	78.00M	186.00M
	Operating Cash Flow
2.58B	2.53B	2.41B	2.26B	2.15B	2.03B
	Investing Cash Flow
-3.41B	-3.13B	-2.69B	-2.07B	-2.06B	-1.98B
	Financing Cash Flow
267.00M	1.23B	-172.00M	-197.00M	-303.00M	674.00M

Hydro One Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 48.55
• 50DMA: Negative
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Positive

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 48.55 is below the 20-day moving average (MA) of 49.76, below the 50-day MA of 50.02, and above the 200-day MA of 46.15, indicating a neutral trend. The MACD of -0.35 indicates Positive momentum. The RSI at 44.04 is Neutral, neither overbought nor oversold. The STOCH value of 9.91 is Positive, 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$29.50B	24.19	10.15%	2.71%	9.95%	11.34%
Sector *	64 Neutral	$8.54B	10.40	4.24%	4.63%	4.14%	-13.05%
BEP		$17.39B	―	-5.97%	5.68%	―	―
CPX	75 Outperform	C$8.83B	12.35	15.24%	4.57%	-27.55%	-12.05%
CU	72 Outperform	C$7.75B	25.83	6.76%	4.85%	-0.53%	-31.77%
FTS		$23.83B	20.02	7.46%	3.79%	―	―
EMA		$13.22B	21.36	7.12%	4.72%	―	―

Hydro One Corporate Events

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.

Hydro One Announces Leadership Change with Chair Resignation

Hydro One Limited announced the resignation of Tim Hodgson as Chair of the Board of Directors following his successful run in the federal election. Susan Wolburgh Jenah will serve as Interim Chair while the Board searches for a new Chair. This leadership change comes as Hydro One continues to focus on its role as a major electricity provider in Ontario, maintaining its commitment to community and economic support through significant investments in infrastructure and services.

Hydro One Appoints Susan Wolburgh Jenah as Interim Chair

Hydro One Limited has appointed Susan Wolburgh Jenah as the Interim Chair of the Board of Directors, following Timothy Hodgson’s leave of absence to participate in the federal election. Susan Wolburgh Jenah brings extensive experience as a senior regulator and corporate director, which is expected to provide stability and strategic guidance during this transitional period for Hydro One.