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ATCO (TSE:ACO.Y)
TSX:ACO.Y
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ATCO
(TSX:ACO.Y)
71Outperform
ATCO (ACO.Y) vs. S&P 500 (SPY)
Market Cap
$5.34B
Dividend Yield4.09%
Average Volume (3M)15.00
Price to Earnings (P/E)12.7
Beta (1Y)0.64
Revenue Growth4.24%
EPS Growth0.42%
CountryCA
Employees20,100
SectorUtilities
Sector Strength84
IndustryRegulated Utilities
Share Statistics
EPS (TTM)3.83
Shares Outstanding12,424,987
10 Day Avg. Volume12
30 Day Avg. Volume15
Financial Highlights & Ratios
PEG Ratio29.82
Price to Book (P/B)N/A
Price to Sales (P/S)1.08
Price to Cash Flow (P/CF)2.20
P/FCF Ratio19.70
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price TargetN/A
Price Target UpsideN/A
Rating ConsensusN/A
Number of Analyst Covering0
ATCO Business Overview & Revenue Model
Company DescriptionATCO Ltd. (ACO.Y) is a diversified global corporation with a focus on essential services such as utilities, energy, structures, and logistics. The company operates in various sectors, including electricity, pipelines, and liquids, offering a wide range of products and services that include natural gas transmission, distribution, and storage, electricity generation, and industrial water solutions. ATCO is also involved in the manufacturing of modular structures and the provision of logistics and support services.
How the Company Makes MoneyATCO generates revenue through multiple streams, primarily from its utilities and energy businesses. The company earns income from the distribution, transmission, and storage of natural gas and electricity, serving residential, commercial, industrial, and institutional customers. In the energy sector, ATCO engages in power generation and sells electricity to a diverse customer base. Additionally, the structures and logistics segment contributes to revenue by providing modular building solutions and associated services to sectors like construction, education, and military. ATCO's earnings are further supported by strategic partnerships and contracts with government entities and private organizations, ensuring a stable and diversified income flow.
ATCO Financial Statement Overview
Summary
ATCO demonstrates stable financial health typical for a regulated utility, with consistent profitability and cash generation. While the company maintains a reasonable balance sheet, leveraging is slightly high, and free cash flow growth has been inconsistent. Overall, ATCO shows reliable performance with room for optimization in cash flow management and equity strengthening.Income Statement
ATCO shows a stable financial performance with a Gross Profit Margin of 62.9% and a Net Profit Margin of 8.7% for 2024. Revenue growth over the years has been modest, with a slight decline in EBIT and EBITDA margins compared to previous years. The company maintains profitability despite fluctuations in revenue and net income.72
Positive
Balance Sheet
The debt-to-equity ratio stands at 2.59, indicating a moderate level of leverage typical for the utilities industry. ROE is 9.3%, reflecting a reasonable return on shareholder equity. The equity ratio of 17.3% suggests a stable capital structure, although there is room for improvement in equity levels.68
Positive
Cash Flow
Free Cash Flow growth has been inconsistent, with a decrease in the recent period. The Operating Cash Flow to Net Income ratio is 5.11, demonstrating strong cash generation capability relative to net income, while the Free Cash Flow to Net Income ratio is lower at 0.91, indicating potential constraints in free cash flow relative to net income.65
Positive
| 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 Technical Analysis
Negative
47.74
Price Trends
48.18
Negative
48.26
Negative
45.77
Positive
Market Momentum
>-0.01
Positive
45.75
Neutral
53.97
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:ACO.Y, the sentiment is Negative. The current price of 47.74 is below the 20-day moving average (MA) of 48.51, below the 50-day MA of 48.18, and above the 200-day MA of 45.77, indicating a neutral trend. The MACD of >-0.01 indicates Positive momentum. The RSI at 45.75 is Neutral, neither overbought nor oversold. The STOCH value of 53.97 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for TSE:ACO.Y.
ATCO Peers Comparison
Overall Rating
UnderperformOutperform
Sector (65)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
79 Outperform | $32.39B | 19.80 | 7.47% | 3.88% | -0.08% | 4.76% | |
74 Outperform | C$28.35B | 24.57 | 9.73% | 2.59% | 8.16% | 6.48% | |
72 Outperform | $17.75B | 34.50 | 4.50% | 5.06% | 7.16% | -52.28% | |
71 Outperform | $5.34B | 12.66 | 9.55% | 4.09% | 4.24% | 0.42% | |
70 Neutral | C$7.15B | 23.68 | 6.93% | 5.17% | -1.42% | -36.31% | |
65 Neutral | $11.91B | 15.60 | 6.55% | 4.41% | 7.00% | 0.55% | |
44 Neutral | $5.41B | ― | 1.65% | 7.13% | -6.41% | -282.03% |
* Utilities Sector Average
Performance Comparison
TSE:ACO.Y
ATCO
47.75
9.96
26.35%
TSE:FTS
Fortis
64.03
12.53
24.33%
TSE:AQN
Algonquin Power & Utilities
6.78
-1.14
-14.43%
TSE:EMA
Emera
59.19
13.09
28.39%
TSE:H
Hydro One
48.04
7.63
18.88%
TSE:CU
Canadian Utilities A
34.75
5.58
19.13%
ATCO Earnings Call Summary
Earnings Call Date: Feb 27, 2025 | % Change Since: -3.55% | Next Earnings Date: Apr 24, 2025
Earnings Call Sentiment Neutral
The earnings call highlighted strong financial performance and strategic growth in ATCO Structures, with significant expansions and acquisitions. However, concerns were raised about moderated growth expectations for 2025, underperformance in ATCO Frontec, and valuation issues for ATCO Structures.Highlights
Strong Financial Performance in 2024
ATCO achieved adjusted earnings of $481 million, which is $49 million and over 11% higher than the previous year, demonstrating strong strategic growth.
Growth in ATCO Structures
ATCO Structures delivered another strong year with adjusted earnings of $108 million, marking the tenth consecutive quarter of year-over-year adjusted earnings growth.
Expansion of Global Footprint
ATCO Structures expanded by establishing 5 new operating locations across Canada and the U.S., enhancing its market position.
Increased Cash Flow
Standalone ATCO businesses generated $280 million in cash flow from operating activities in 2024, up over 50% from the prior year.
Strategic Acquisition of NRB Modular Solutions
The acquisition allowed ATCO to expand its manufacturing capabilities, enhancing its competitive position in Ontario and British Columbia.
Lowlights
Moderated Growth Expectations for 2025
Due to a reset in Alberta utilities' allowable ROE and the end of the efficiency carryover mechanism, more moderated growth is expected in 2025.
Underperformance of ATCO Frontec
ATCO Frontec reported negative earnings, facing headwinds such as inflation and tight margins, impacting its profitability.
Valuation Concerns for ATCO Structures
Despite strong performance, ATCO Structures continues to be valued at a significant discount compared to North American peers.
Company Guidance
During the fourth quarter of 2024, ATCO Limited reported adjusted earnings of $481 million, marking an increase of $49 million, or over 11%, compared to the previous year. This growth was attributed to rate base growth across Canadian Utilities and an increase in allowable ROE from 8.5% in 2023 to 9.28% in 2024, though a reset to 8.97% is anticipated for 2025. ATCO Structures experienced a $14 million increase in adjusted earnings, driven by strong performance in global space rental activity and workforce housing sales. Overall, cash flow from operating activities for ATCO businesses, excluding Canadian Utilities, reached $280 million, representing a growth of over 50% from the prior year. The company highlighted its capital investment plan, which is expected to be primarily funded by internally generated cash flow, and emphasized a focus on investing within the essential services space to support long-term growth.Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.