Education
About Us
Working with TipRanks
Follow Us
Canadian Utilities A (TSE:CU)
:CU
Top Page
Canadian Utilities A
(TSX:CU)
70Neutral
Positive Factors
Earnings
Q4/24 adjusted EPS of $0.74 came in above consensus' $0.72 and analyst's $0.70, driven by greater ATCO Energy Systems and lower Corporate expense.
Rate Base Growth
The Q4/24 earnings report highlighted that rate base growth is once again on the rise.
Negative Factors
Alberta Utility Earnings
Comments on the call that Alberta utility earnings will moderate overshadowed the 3% EPS beat and positive revision to rate base growth.
Canadian Utilities A (CU) vs. S&P 500 (SPY)
Market Cap
C$7.12B
Dividend Yield5.21%
Average Volume (3M)587.78K
Price to Earnings (P/E)23.5
Beta (1Y)0.58
Revenue Growth-1.42%
EPS Growth-36.31%
CountryCA
Employees9,000
SectorUtilities
Sector Strength84
IndustryRegulated Utilities
Share Statistics
EPS (TTM)1.49
Shares Outstanding204,968,490
10 Day Avg. Volume674,902
30 Day Avg. Volume587,780
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)1.91
Price to Cash Flow (P/CF)3.40
P/FCF Ratio24.30
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
C$38.75Price Target Upside11.13% Upside
Rating ConsensusHold
Number of Analyst Covering4
Canadian Utilities A Business Overview & Revenue Model
Company DescriptionCanadian Utilities Limited (CU) is a diversified global energy infrastructure corporation based in Canada. It operates in various sectors including electricity, pipelines and liquids, and retail energy through its subsidiaries. The company provides integrated energy solutions to customers through a range of services such as electricity generation, transmission, and distribution, as well as natural gas transmission, distribution, and infrastructure development.
How the Company Makes MoneyCanadian Utilities makes money primarily through its regulated utility operations, which include electricity and natural gas distribution and transmission. These operations generate stable and predictable cash flows due to regulated rates set by government authorities. The company also earns revenue from its unregulated businesses, such as power generation and energy retail services, which compete in open markets. Additionally, Canadian Utilities engages in long-term contracts and partnerships to provide infrastructure and energy solutions, contributing to its earnings. Significant factors like regulatory decisions, energy demand, and market conditions influence the company's revenue streams.
Canadian Utilities A Financial Statement Overview
Summary
Canadian Utilities A shows strong operational efficiency and stable asset management typical of regulated utilities. However, challenges include fluctuating revenue, declining net profit margins, and high leverage levels. Consistent positive operating cash flow is a positive indicator, but volatility in free cash flow suggests cash management concerns.Income Statement
Canadian Utilities A has seen fluctuating revenue growth with a recent decline, indicating potential challenges in expanding its revenue base. Despite this, the company maintains a strong gross profit margin, reflecting effective cost management. The EBIT and EBITDA margins are robust, suggesting operational efficiency, although there is a noticeable decline in net profit margin over the years.67
Positive
Balance Sheet
The company has a relatively high debt-to-equity ratio, which poses a risk of financial leverage, but is common in the utilities sector. The equity ratio remains stable, indicating a strong asset base supported by equity. Return on equity has decreased, pointing to challenges in generating profits from shareholders' equity.72
Positive
Cash Flow
Operating cash flow remains strong and consistently positive, but free cash flow has been volatile, which may impact future investments. The operating cash flow to net income ratio suggests that cash flow generation is healthy relative to net income, though recent free cash flow growth has been negative, highlighting potential cash management concerns.64
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 3.74B | 3.80B | 4.05B | 3.52B | 3.23B | Gross Profit |
| 2.60B | 2.57B | 2.73B | 2.37B | 2.27B | EBIT |
| 1.06B | 1.32B | 1.21B | 940.00M | 972.00M | EBITDA |
| 1.84B | 2.09B | 1.80B | 1.53B | 1.55B | Net Income Common Stockholders |
| 480.00M | 707.00M | 632.00M | 393.00M | 427.00M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 332.00M | 407.00M | 698.00M | 746.00M | 776.00M | Total Assets |
| 23.79B | 23.16B | 21.97B | 21.07B | 20.30B | Total Debt |
| 11.11B | 10.59B | 9.59B | 9.57B | 9.11B | Net Debt |
| 10.94B | 10.38B | 8.89B | 8.82B | 8.34B | Total Liabilities |
| 16.67B | 16.00B | 14.91B | 14.25B | 13.49B | Stockholders Equity |
| 6.91B | 6.94B | 6.88B | 6.63B | 6.62B |
| Cash Flow | Free Cash Flow | |||
| 322.00M | -12.00M | 771.00M | 497.00M | 741.00M | Operating Cash Flow |
| 1.92B | 1.33B | 2.14B | 1.72B | 1.63B | Investing Cash Flow |
| -1.41B | -2.25B | -1.26B | -1.26B | -905.00M | Financing Cash Flow |
| -790.00M | 434.00M | -932.00M | -478.00M | -924.00M |
Canadian Utilities A Technical Analysis
Positive
34.87
Price Trends
34.04
Positive
34.49
Positive
33.01
Positive
Market Momentum
0.30
Negative
53.53
Neutral
50.90
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:CU, the sentiment is Positive. The current price of 34.87 is above the 20-day moving average (MA) of 34.55, above the 50-day MA of 34.04, and above the 200-day MA of 33.01, indicating a bullish trend. The MACD of 0.30 indicates Negative momentum. The RSI at 53.53 is Neutral, neither overbought nor oversold. The STOCH value of 50.90 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for TSE:CU.
Canadian Utilities A 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 | C$32.39B | 19.80 | 7.47% | 3.88% | -0.08% | 4.76% | |
73 Outperform | $134.29B | 25.79 | 8.63% | 6.31% | 24.95% | -17.19% | |
72 Outperform | $17.75B | 34.50 | 4.50% | 5.06% | 7.16% | -52.28% | |
70 Neutral | C$7.12B | 23.48 | 6.93% | 5.21% | -1.42% | -36.31% | |
65 Neutral | $11.91B | 15.60 | 6.55% | 4.41% | 7.00% | 0.55% | |
58 Neutral | $22.08B | ― | -4.87% | 6.38% | 22.01% | -183.73% | |
44 Neutral | $5.41B | ― | 1.65% | 7.13% | -6.41% | -282.03% |
* Utilities Sector Average
Performance Comparison
TSE:CU
Canadian Utilities A
34.75
5.58
19.13%
TSE:FTS
Fortis
64.03
12.53
24.33%
TSE:BEP.UN
Brookfield Renewable Partners
32.89
3.36
11.37%
TSE:AQN
Algonquin Power & Utilities
6.78
-1.14
-14.43%
TSE:ENB
Enbridge
61.01
15.38
33.69%
TSE:EMA
Emera
59.19
13.09
28.39%
Canadian Utilities A Earnings Call Summary
Earnings Call Date: Feb 27, 2025 | % Change Since: -0.06% | Next Earnings Date: Apr 24, 2025
Earnings Call Sentiment Neutral
The earnings call highlighted significant achievements in adjusted earnings growth, expansion plans, and positive developments in Australia. However, challenges such as decreased ROE, renewable market uncertainties, and regulatory issues present notable headwinds. Despite these challenges, the company's strategic investments and focus on growth provide a positive outlook.Highlights
Strong Adjusted Earnings Growth
Canadian Utilities achieved adjusted earnings of $647 million in 2024, up from $596 million in 2023, translating to adjusted earnings per share of $2.38.
ATCO Energy Systems Performance
ATCO Energy Systems delivered adjusted earnings of $632 million in 2024, an increase of 11% or $61 million compared to 2023. This was driven by rate base growth and an increase in the allowable ROE.
Expansion Plans and Capital Investment
The company invested $1.4 billion in utilities within ATCO Energy Systems and plans to invest $5.8 billion within Canadian regulated utilities over the next three years. This is expected to drive an average annual rate base growth of 5.4%.
Positive Developments in Australia
In Australia, ATCO Gas delivered adjusted earnings of $48 million. The new AA6 plan increased the regulated ROE to 8.23%, expected to increase adjusted earnings by 8% to 10% in 2025.
Lowlights
Decrease in Allowable ROE
The allowable ROE for ATCO Energy Systems in Alberta was reset from 9.28% to 8.97% for 2025, expected to negatively impact earnings by approximately $15 million.
Renewable Energy Market Uncertainties
A significant decrease in merchant power prices in Alberta led to a lower average realized price of $75 per megawatt in 2024 compared to $95 in 2023. Additionally, regulatory uncertainty is causing delays in renewable projects in Alberta.
Challenges in Australian Operations
Adjusted earnings in ATCO Australia fell by $12 million compared to 2023 due to the impact of lower inflation indexing on the rate base.
Regulatory and Political Uncertainty
The company faces uncertainty due to political and regulatory conditions affecting hydrogen and carbon projects, both federally and provincially.
Company Guidance
During the Canadian Utilities Limited fourth quarter 2024 results conference call, the company provided guidance on several key financial metrics and future expectations. In 2024, Canadian Utilities achieved adjusted earnings of $647 million, up from $596 million in 2023, translating to adjusted earnings per share of $2.38. ATCO Energy Systems reported adjusted earnings of $632 million, an 11% increase from the previous year, driven by rate base growth and an increase in the allowable return on equity (ROE) from 8.5% in 2023 to 9.8% in 2024. However, for 2025, the allowable ROE is set to decrease to 8.97%, impacting earnings by approximately $15 million. Despite these headwinds, the company anticipates continued rate base growth and efficiency improvements. The ATCO EnPower segment achieved an adjusted EBITDA of $146 million, up $14 million, with adjusted earnings of $44 million. Within its electricity generation business, adjusted EBITDA increased by $2 million to $75 million, despite lower power prices. The storage and industrial water business also performed well, with an adjusted EBITDA of $71 million, up $7 million. ATCO Australia, however, saw adjusted earnings decline by $12 million due to lower inflation indexing. Overall, Canadian Utilities generated $1.9 billion in cash flow from operations, supporting their capital program and commitments. Looking forward, Canadian Utilities plans to invest $5.8 billion in its Canadian regulated utilities over the next three years, targeting an average annual rate base growth of 5.4%.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.