ATCO Ltd Cl I NV (ACO.X) AI Stock Analysis

• Market Cap: C$5.64B
• Dividend Yield: 3.95%
• Average Volume (3M): 272.55K
• Price to Earnings (P/E): 13.1
• Beta (1Y): 0.65
• Revenue Growth: 4.24%
• EPS Growth: 0.42%
• Country: CA
• Employees: 20,582
• Sector: Utilities
• Sector Strength: 81
• Industry: Diversified Utilities
• EPS (TTM): 3.83
• Shares Outstanding: 99,810,590
• 10 Day Avg. Volume: 311,891
• 30 Day Avg. Volume: 272,547
• PEG Ratio: 30.81
• Price to Book (P/B): N/A
• Price to Sales (P/S): 1.10
• Price to Cash Flow (P/CF): 2.20
• P/FCF Ratio: 19.90
• 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$52.25
• Price Target Upside: 4.25% Upside
• Rating Consensus: Hold
• Number of Analyst Covering: 4

ATCO Ltd. shows strong financial performance and operational efficiency, typical of regulated utilities, with a reasonable valuation and stable technical indicators. The company's recent earnings call highlighted significant growth, despite some challenges, contributing to a positive outlook. Investors may find ATCO Ltd. appealing for its stable returns and strategic expansion efforts.

Positive Factors

Analyst Outlook

Analyst maintains an Outperform rating and boosts the target price to $56.

Earnings

ATCO reported Q4/24 adjusted EPS well above expectations, driven mainly by ATCO Energy Systems and Corporate segment performance.

Growth Trajectory

Utility rate base growth expectations were raised, Structures is starting 2025 stronger than 2024, and Neltume is delivering reliable earnings.

Negative Factors

Market Performance

Despite strong results and positive revisions, ACO.X shares traded down in the broad utility sell-off.

Valuation

Despite strong results, the ACO.X shares are still quite discounted relative to utility peers.

ATCO Ltd Cl I NV Business Overview & Revenue Model

Company Description

ATCO Ltd., together with its subsidiaries, provides housing, logistics and transportation, agriculture, water, real estate, and energy and energy infrastructure solutions in Canada, Australia, and internationally. The company offers workforce and residential housing; modular facilities; construction and site support; workforce lodging; facility operations and maintenance; defense operations; and disaster and emergency management services. It also provides commercial real estate services, including sale of commercial and industrial properties; and bulk cargo and port operation services, as well as operates container port facilities. The company's portfolio includes 14 commercial real estate properties, including 417,000 square feet of office property, 60,000 square feet of industrial property, and 315 acres of land. In addition, it engages in electricity generation, distribution, transmission, and related infrastructure services; natural gas distribution; owns and operates natural gas transmission pipelines in Alberta, Saskatchewan, and northern regions of Canada, as well as in Western Australia; and builds, owns, and operates non-regulated industrial water, natural gas storage, natural gas liquids storage, and natural gas related infrastructure to serve the midstream and petrochemical sectors. Further, it sells electricity and natural gas to residential and commercial customers; and provides natural gas appliance demonstrations and small cooking schools for homemakers. ATCO Ltd. was founded in 1947 and is headquartered in Calgary, Canada. ATCO Ltd. operates as a subsidiary of Sentgraf Enterprises Ltd.

How the Company Makes Money

ATCO Ltd generates revenue through a diversified business model that encompasses multiple streams. Its primary revenue sources include the sale and distribution of electricity and natural gas, facilitated through its extensive utility networks. Additionally, the company earns income from its structures and logistics division, which provides modular building solutions and workforce accommodation services. ATCO also benefits from long-term contracts and partnerships with government and commercial entities, ensuring steady cash flows. The company's strategic investments in renewable energy projects and infrastructure further contribute to its earnings, positioning it to capitalize on the growing demand for sustainable energy solutions.

ATCO Ltd Cl I NV Financial Statement Overview

Summary

ATCO Ltd. demonstrates solid operational efficiency and stable financial health typical of regulated utilities. The company manages its debt well, but profitability metrics suggest potential areas for improvement. Cash flow generation is strong, though recent free cash flow trends indicate variability.

Income Statement

ATCO Ltd. shows stable revenue with a minor decline in recent years. The gross profit margin remains strong at approximately 62.9%. EBIT and EBITDA margins are robust, indicating operational efficiency. However, the net profit margin is moderate at 8.7%, impacted by fluctuating net income.

Balance Sheet

The company maintains a moderate debt-to-equity ratio of 2.59, indicating reliance on debt financing. The equity ratio is 17.3%, suggesting a stable equity base. Return on equity is modest at 9.3%, showing room for improvement in generating shareholder value.

Cash Flow

Operating cash flow is strong, covering net income comfortably with a ratio of 5.11. However, free cash flow has shown volatility, with a recent decrease. The free cash flow to net income ratio at 0.91 indicates adequate cash generation relative to earnings.

Breakdown
Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
4.94B	4.74B	4.98B	4.29B	3.94B
	Gross Profit
3.11B	3.03B	3.12B	2.72B	2.59B
	EBIT
1.36B	1.50B	1.31B	1.04B	1.07B
	EBITDA
2.26B	2.27B	1.97B	1.76B	1.75B
	Net Income Common Stockholders
430.00M	432.00M	707.00M	469.00M	497.00M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
703.00M	576.00M	1.03B	1.07B	1.06B
	Total Assets
26.72B	25.36B	24.14B	23.00B	22.20B
	Total Debt
11.98B	11.17B	10.20B	10.15B	9.72B
	Net Debt
11.62B	10.88B	9.17B	9.08B	8.66B
	Total Liabilities
18.01B	16.86B	15.79B	15.05B	14.35B
	Stockholders Equity
4.63B	4.42B	4.38B	4.11B	4.05B
Cash Flow		Free Cash Flow
393.00M	400.00M	813.00M	518.00M	815.00M
	Operating Cash Flow
2.20B	1.97B	2.40B	1.86B	1.84B
	Investing Cash Flow
-1.80B	-2.58B	-1.50B	-1.38B	-1.06B
	Financing Cash Flow
-588.00M	-123.00M	-953.00M	-486.00M	-823.00M

ATCO Ltd Cl I NV Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 50.12
• 50DMA: Positive
• 100DMA: Positive
• 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:ACO.X, the sentiment is Positive. The current price of 50.12 is above the 20-day moving average (MA) of 48.50, above the 50-day MA of 47.42, and above the 200-day MA of 45.16, indicating a bullish trend. The MACD of 0.64 indicates Negative momentum. The RSI at 64.69 is Neutral, neither overbought nor oversold. The STOCH value of 80.31 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for TSE:ACO.X.

ATCO Ltd Cl I NV Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
ACO.X	74 Outperform	C$5.64B	13.07	9.50%	3.95%	4.24%	0.42%
CU	70 Neutral	C$7.53B	24.75	6.93%	4.94%	-1.42%	-36.31%
Sector *	65 Neutral	$12.08B	16.09	6.13%	4.37%	5.50%	-8.75%

ATCO Ltd Cl I NV Corporate Events

ATCO Ltd. Reports Increased 2024 Earnings and Secures New Contracts

ATCO Ltd. reported an increase in adjusted earnings for 2024, reaching $481 million, up from $432 million in 2023, highlighting a strong financial performance. The company has secured multiple contracts in Canada, Australia, and Chile, and announced a significant agreement in the U.S., indicating strategic growth and expansion in its operations.

ATCO Ltd. to Announce Year-End 2024 Financial Results

ATCO Ltd. announced it will release its year-end 2024 financial results on February 27, 2025. The release will be available through Cision and on the company’s website. A live teleconference and webcast will be held on the same day, featuring key executives who will provide insights and engage in a Q&A session with analysts. This announcement highlights ATCO’s commitment to transparency and engagement with stakeholders, providing an opportunity for investors and analysts to gain further understanding of the company’s financial performance and strategic positioning.

ATCO Ltd. Increases Dividend for 32nd Consecutive Year

ATCO Ltd. has announced a three per cent increase in its common share dividend, marking the 32nd consecutive year of such an increase. The new dividend rate is set at 50.45 cents per share, payable on March 31, 2025, to shareholders recorded by February 27, 2025. This consistent dividend increase reflects ATCO’s ongoing commitment to shareholder value and underscores its stable financial performance in the energy and infrastructure sectors.

ATCO’s Ashcor Partners with Consumers Energy for Sustainable Coal Ash Repurposing

Ashcor USA Inc., a division of ATCO Ltd., and Consumers Energy have partnered to remediate coal ash from the J.H. Campbell Power Plant in Michigan. This project will transform the stored coal ash into a sustainable cement substitute, reducing the environmental impact associated with traditional cement production. The initiative not only supports the transition away from coal-fired power but also contributes to a reduction in global CO2 emissions by offering a more sustainable concrete solution. This effort marks Ashcor’s third Reclaimed Ash Management (RAM™) facility, highlighting the company’s commitment to environmental responsibility and innovation in construction materials.