Hydro One (H.TO)
Utilities · TSX · Canada
Fundamentals
Valuation and ratings
Hydro One trades at C$58.81, which is 16% above the C$49.48 our discounted cash flow model puts on the business. On that measure it screens as expensive, which is not the same as saying it will fall.
Our moat model scores it 53 out of 100, which is a moat, but not a deep one. A moat is a structural reason competitors cannot take the profits away, and it matters more to a long holding period than any single quarter's numbers do.
It changes hands at 25.7 times earnings. Be careful reading that in isolation: for a cyclical business a low P/E arrives at the top of the cycle, when profits are peaking and about to fall, which is exactly when the shares look cheapest and are not.
About Hydro One
Hydro One Limited operates as an electricity transmission and distribution company in Ontario. It operates through three segments: Transmission, Distribution, and Other. The company owns and operates approximately 30,000 circuit kilometers of high-voltage transmission lines and approximately 126,000 circuit kilometers primary low-voltage distribution lines. It provides telecommunications support services for its transmission and distribution businesses; and information and communications technology services and solutions. It serves residential, small business, commercial, and industrial customers, as well as municipal utilities. Hydro One Limited was incorporated in 2015 and is headquartered in Toronto, Canada.
H.TO passes 2 of our 30 screens today
Each screen prints the exact criteria it used, and the circumstances in which it is wrong.
Common questions
Is Hydro One (H.TO) undervalued?
Against our discounted cash flow estimate of C$49.48, H.TO at C$58.81 is 16% above fair value. That is one model's answer, not a recommendation, and most of a DCF's output sits in a terminal value nobody can forecast.
What is H.TO's P/E ratio?
H.TO trades at 25.7 times earnings. A low P/E is not automatically cheap: on a cyclical company it is usually a warning that earnings are at a peak.
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Data from company filings, exchange quotes and SEC EDGAR 13F disclosures. Quotes are delayed. Metrics we do not have are left out rather than estimated. Educational information, not financial advice.