TSX:H

Stock Analysis Report

Executive Summary

Hydro One Limited, through its subsidiaries, operates as an electrical transmission and distribution company in Ontario.


Snowflake Analysis

Second-rate dividend payer and slightly overvalued.


Similar Companies

Share Price & News

How has Hydro One's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: H has not had significant price volatility in the past 3 months.


Market Performance


7 Day Return

-1.4%

H

1.7%

CA Electric Utilities

1.0%

CA Market


1 Year Return

18.9%

H

-4.3%

CA Electric Utilities

-23.3%

CA Market

Return vs Industry: H exceeded the Canadian Electric Utilities industry which returned 0.7% over the past year.

Return vs Market: H exceeded the Canadian Market which returned -23.7% over the past year.


Shareholder returns

HIndustryMarket
7 Day-1.4%1.7%1.0%
30 Day-10.4%-17.1%-19.9%
90 Day-0.08%-14.3%-23.8%
1 Year23.6%18.9%-1.2%-4.3%-20.8%-23.3%
3 Year16.5%2.9%16.6%5.3%-12.7%-20.9%
5 Yearn/a46.7%22.3%-0.1%-15.0%

Price Volatility Vs. Market

How volatile is Hydro One's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is Hydro One undervalued compared to its fair value and its price relative to the market?

19.08x

Price to Earnings (PE) ratio


Share Price vs. Fair Value

Below Fair Value: H (CA$25.34) is trading above our estimate of fair value (CA$24.23)

Significantly Below Fair Value: H is trading above our estimate of fair value.


Price To Earnings Ratio

PE vs Industry: H is good value based on its PE Ratio (19.4x) compared to the Electric Utilities industry average (19.8x).

PE vs Market: H is poor value based on its PE Ratio (19.4x) compared to the Canadian market (10.4x).


Price to Earnings Growth Ratio

PEG Ratio: H is poor value based on its PEG Ratio (3.7x)


Price to Book Ratio

PB vs Industry: H is good value based on its PB Ratio (1.6x) compared to the XN Electric Utilities industry average (1.8x).


Next Steps

Future Growth

How is Hydro One forecast to perform in the next 1 to 3 years based on estimates from 11 analysts?

5.3%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: H's forecast earnings growth (5.3% per year) is above the savings rate (1.4%).

Earnings vs Market: H's earnings (5.3% per year) are forecast to grow slower than the Canadian market (7.1% per year).

High Growth Earnings: H's earnings are forecast to grow, but not significantly.

Revenue vs Market: H's revenue (3.1% per year) is forecast to grow slower than the Canadian market (3.7% per year).

High Growth Revenue: H's revenue (3.1% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: H's Return on Equity is forecast to be low in 3 years time (8.9%).


Next Steps

Past Performance

How has Hydro One performed over the past 5 years?

-21.5%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: H has high quality earnings.

Growing Profit Margin: H became profitable in the past.


Past Earnings Growth Analysis

Earnings Trend: H's earnings have declined by -21.5% per year over the past 5 years.

Accelerating Growth: H has become profitable in the last year, making the earnings growth rate difficult to compare to its 5-year average.

Earnings vs Industry: H has become profitable in the last year, making it difficult to compare its past year earnings growth to the Electric Utilities industry (6%).


Return on Equity

High ROE: H's Return on Equity (8.1%) is considered low.


Next Steps

Financial Health

How is Hydro One's financial position?


Financial Position Analysis

Short Term Liabilities: H's short term assets (CA$1.3B) do not cover its short term liabilities (CA$3.1B).

Long Term Liabilities: H's short term assets (CA$1.3B) do not cover its long term liabilities (CA$14.1B).


Debt to Equity History and Analysis

Debt Level: H's debt to equity ratio (127.9%) is considered high.

Reducing Debt: H's debt to equity ratio has increased from 112.3% to 127.9% over the past 5 years.

Debt Coverage: H's debt is not well covered by operating cash flow (12.8%).

Interest Coverage: H's interest payments on its debt are well covered by EBIT (3.1x coverage).


Balance Sheet

Inventory Level: H has a high level of physical assets or inventory.

Debt Coverage by Assets: H's debt is not covered by short term assets (assets are 0.1x debt).


Next Steps

Dividend

What is Hydro One's current dividend yield, its reliability and sustainability?

3.88%

Current Dividend Yield


Dividend Yield vs Market

Notable Dividend: H's dividend (3.81%) is higher than the bottom 25% of dividend payers in the Canadian market (2.69%).

High Dividend: H's dividend (3.81%) is low compared to the top 25% of dividend payers in the Canadian market (8.66%).


Stability and Growth of Payments

Stable Dividend: Whilst dividend payments have been stable, H has been paying a dividend for less than 10 years.

Growing Dividend: H's dividend payments have increased, but the company has only paid a dividend for 4 years.


Current Payout to Shareholders

Dividend Coverage: With its reasonable payout ratio (73.2%), H's dividend payments are covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: H's dividends in 3 years are forecast to be covered by earnings (71.8% payout ratio).


Next Steps

Management

How experienced are the management team and are they aligned to shareholders interests?

1.1yrs

Average management tenure


CEO

Mark Poweska (49yo)

0.92

Tenure

CA$860,387

Compensation

Mr. Mark Poweska, P.Eng. is President, CEO and Director at Hydro One Inc. since May 10, 2019. Mr. Poweska is a Director at Ontario Energy Association. Mr. Poweska has been the President, Chief Executive Of ...


CEO Compensation Analysis

Compensation vs Market: Mark's total compensation ($USD607.00K) is below average for companies of similar size in the Canadian market ($USD6.66M).

Compensation vs Earnings: Insufficient data to compare Mark's compensation with company performance.


Leadership Team

NamePositionTenureCompensationOwnership
Mark Poweska
President0.92yrCA$860.39k0.000030% CA$4.5k
Christopher Lopez
Chief Financial Officer1.58yrsCA$909.03k0.0031% CA$456.2k
Brad Bowness
Chief Information Officer1.25yrsCA$544.27k0.000080% CA$11.9k
Saylor Millitz-Lee
Chief Human Resources Officer1yrCA$730.80k0.00030% CA$44.6k
Jason Fitzsimmons
Chief Corporate Affairs & Customer Care Officer1.67yrsCA$586.00k0.0014% CA$202.1k
David Lebeter
Chief Operating Officer0.25yrno datano data
Omar Javed
Vice President of Investor Relationsno datano datano data
Joseph Agostino
Chief Compliance Officer5.33yrsCA$402.38kno data
Paul Harricks
Executive VP & Chief Legal Officer0.58yrno datano data
Jay Armitage
Director of Corporate Communicationsno datano datano data

1.1yrs

Average Tenure

48.5yo

Average Age

Experienced Management: H's management team is not considered experienced ( 1.1 years average tenure), which suggests a new team.


Board Members

NamePositionTenureCompensationOwnership
Mark Poweska
President0.92yrCA$860.39k0.000030% CA$4.5k
William Sheffield
Independent Director1.67yrsCA$98.92k0.000020% CA$3.0k
G. Cowper-Smith
Independent Director1.67yrsCA$102.15kno data
David Hay
Independent Director1.67yrsCA$94.44kno data
Melissa Sonberg
Independent Director1.67yrsCA$103.15kno data
Anne Giardini
Independent Director1.67yrsCA$104.65k0.00034% CA$50.5k
Timothy Hodgson
Independent Chairman of the Board0.67yrCA$111.07kno data
Russel Robertson
Independent Director1.67yrsCA$97.67kno data
Jessica McDonald
Independent Director1.67yrsCA$97.44kno data
Cherie Brant
Independent Director1.67yrsCA$94.44kno data

1.7yrs

Average Tenure

58.5yo

Average Age

Experienced Board: H's board of directors are not considered experienced ( 1.7 years average tenure), which suggests a new board.


Ownership

Who are the major shareholders and have insiders been buying or selling?


Insider Trading Volume

Insider Buying: H insiders have bought more shares than they have sold in the past 3 months.


Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Top Shareholders

Company Information

Hydro One Limited's company bio, employee growth, exchange listings and data sources


Key Information

  • Name: Hydro One Limited
  • Ticker: H
  • Exchange: TSX
  • Founded: 2015
  • Industry: Electric Utilities
  • Sector: Utilities
  • Market Cap: CA$14.861b
  • Shares outstanding: 597.06m
  • Website: https://www.hydroone.com

Number of Employees


Location

  • Hydro One Limited
  • South Tower
  • 8th Floor
  • Toronto
  • Ontario
  • M5G 2P5
  • Canada

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
HTSX (The Toronto Stock Exchange)YesNew Common StockCACADNov 2015
HRNN.FOTCPK (Pink Sheets LLC)YesNew Common StockUSUSDNov 2015
8H1DB (Deutsche Boerse AG)YesNew Common StockDEEURNov 2015

Biography

Hydro One Limited, through its subsidiaries, operates as an electrical transmission and distribution company in Ontario. It operates through three segments: Transmission, Distribution, and Other Business. The company owns and operates approximately 123,000 circuit kilometers of low-voltage distribution network. It serves approximately 1.4 million residential, small business, commercial, and industrial customers. The company also provides telecommunications support services for its transmission and distribution businesses; and communications and information technology solutions to organizations for broadband network connectivity. Hydro One Limited was incorporated in 2015 and is headquartered in Toronto, Canada. 


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2020/04/02 04:06
End of Day Share Price2020/04/01 00:00
Earnings2019/12/31
Annual Earnings2019/12/31


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.