Fact based stock research
Hydro One (TSX:H)

CA4488112083

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For every stock, we judge its performance against its peers and rank it on a scale of 1 to 100. The higher the rank, the better the stock performs than its peers. And, we do this for six investment strategies:
Value - shows how good of a value the stock is. Green is "inexpensive"; red is "expensive".

Growth - shows a company's growth potential. Green is "high growth" expected; red is "tough times ahead".

Safety - relates to the amount of debt a company has. Green is low debt level; red is high debt level.

Combined Financial - this isn't an average of the first three ranks but rather a consolidated view across several financial indicators. Green = good; red = tread carefully.

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Hydro One stock research in summary

hydroone.com


ANALYSIS: With an Obermatt Combined Rank of 75 (better than 75% compared with investment alternatives), Hydro One (Electric Utilities, Canada) shares have much better financial characteristics than comparable stocks. Shares of Hydro One are low in value (priced high) with a consolidated Value Rank of 23 (worse than 77% of alternatives). But they show above-average growth (Growth Rank of 79) and are safely financed (Safety Rank of 73, which means below-average debt burdens). ...read more


RECOMMENDATION: A Combined Rank of 75, is a strong buy recommendation based on Hydro One's financial characteristics. Investors looking for growth and low financial risk may find this stock attractive. While the company Hydro One exhibits low value (Obermatt Value Rank of 23), which means that the stock price is rather high, it also demonstrates above-average growth (Obermatt Growth Rank of 79). This is a typical case, as high-growth companies are often expensive. Good financing practices (Obermatt Safety Rank of 73) are a double-edged sword: if the company continues growing, low debt limits shareholder returns. But if the company increases its debt, it will also increase risk. In other words, this is an investment on the safer side, despite the above-average price (low value). Obermatt Premium subscribers can further check the stock’s Sentiment Ranks, which also flow into the Obermatt 360° View for investors. ...read more


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Country Canada
Industry Electric Utilities
Index Electromobility, TSX Composite
Size class X-Large

This stock has achievements: Top 10 Stock.

21-Mar-2024. Stock data may be delayed. Log in or sign up to get the most recent research.




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Research History: Hydro One

RESEARCH HISTORY 2021 2022 2023 2024
VALUE
VALUE
GROWTH
GROWTH
SAFETY
SAFETY
SENTIMENT
SENTIMENT
360° VIEW
360° VIEW

Most recent update of the stock research: 21-Mar-2024. Financial reporting date used for calculating ranks: 30-Sep-2023. Stock research history is based on the Obermatt Method. The higher the rank, the better Hydro One is in the corresponding investment strategy.
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Combined financial peformance in Detail

ANALYSIS: With an Obermatt Combined Rank of 75 (better than 75% compared with investment alternatives), Hydro One (Electric Utilities, Canada) shares have much better financial characteristics than comparable stocks. Shares of Hydro One are low in value (priced high) with a consolidated Value Rank of 23 (worse than 77% of alternatives). But they show above-average growth (Growth Rank of 79) and are safely financed (Safety Rank of 73, which means below-average debt burdens). ...read more

RECOMMENDATION: A Combined Rank of 75, is a strong buy recommendation based on Hydro One's financial characteristics. Investors looking for growth and low financial risk may find this stock attractive. While the company Hydro One exhibits low value (Obermatt Value Rank of 23), which means that the stock price is rather high, it also demonstrates above-average growth (Obermatt Growth Rank of 79). This is a typical case, as high-growth companies are often expensive. Good financing practices (Obermatt Safety Rank of 73) are a double-edged sword: if the company continues growing, low debt limits shareholder returns. But if the company increases its debt, it will also increase risk. In other words, this is an investment on the safer side, despite the above-average price (low value). Obermatt Premium subscribers can further check the stock’s Sentiment Ranks, which also flow into the Obermatt 360° View for investors. ...read more

RESEARCH HISTORY 2021 2022 2023 2024
VALUE
VALUE
GROWTH
GROWTH
SAFETY
SAFETY
COMBINED
COMBINED

Last update of combined financial performance: 21-Mar-2024. Stock analysis on combined financial performance: The higher the rank of Hydro One the better the performance.


Value Metrics in Detail

ANALYSIS: With an Obermatt Value Rank of 23 (worse than 77% compared with alternatives), Hydro One shares are significantly more expensive than comparable stocks. The Value Rank is based on consolidating four value indicators, with all four indicators below average for Hydro One. Price-to-Sales is 22 which means that the stock price compared with what market professionals expect for future profits is higher than 78% of comparable companies, indicating a low value concerning Hydro One's sales levels. Price-to-Book Capital (also referred to as market-to-book ratio) also has a low Price-to-Book Rank of 32, which means that both reliable company size indicators, sales, and invested capital cannot explain the high stock price of Hydro One. In addition, the two profit-related value indicators, Price-to-Profit (also referred to as price-earnings, P/E) with a low rank of 13 and Dividend Yield, which is lower than 75% of comparable companies, also make the stock more expensive compared with investment alternatives. ...read more

RECOMMENDATION: The overall picture with a consolidated Value Rank of 23, is a sell recommendation based on Hydro One's stock price compared with the company's operational size and dividend yields. How can market participants pay such a high price for Hydro One? One reason may be that the company is simply too popular. If enough people want a particular stock, its price can exceed reasonable levels. This is often the case for companies offering new and exciting products and everybody wants a piece of the action. Should you pay a lot for a hot stock such as Hydro One? It's risky, and even if the stock price continues to grow because of popular demand, it may return to more typical lower levels later. And that return can be sudden and quick, making it impossible for retail investors to exit on time. Sometimes, high prices are deserved. This is the case when it is justified to believe that the company will dominate a market with high profit margins. It has happened in the past for many technology companies and indeed for commercially successful pharmaceutical discoveries. Sometimes they last, sometimes, they get eaten alive. Hydro One may be such a type of stock. That would mean, retail investors should be careful, only considering investing a small part of their wealth in this exciting category and always being ready to lose more than half, if not all of the investment. We recommend further analyzing the stock with Obermatt’s Value, Safety, and Sentiment Ranks, including the 360° View, before making an investment decision, which is essential in this case, as the financial indicators are inconclusive. ...read more


VALUE METRICS 2021 2022 2023 2024
PRICE VS. REVENUES (P/S)
PRICE VS. REVENUES (P/S)
PRICE VS. PROFITS (P/E)
PRICE VS. PROFITS (P/E)
PRICE VS. CAPITAL (Market-to-Book)
PRICE VS. CAPITAL (Market-to-Book)
DIVIDEND YIELD
DIVIDEND YIELD
CONSOLIDATED RANK: VALUE
CONSOLIDATED RANK: VALUE

Last update of Value Rank: 21-Mar-2024. Stock analysis on value ratios: The higher the rank, the lower the value ratio of Hydro One; except for dividend yield where the rank is higher, the higher the yield.


Growth Metrics in Detail

ANALYSIS: With an Obermatt Growth Rank of 79 (better than 79% compared with alternatives) for 2024, Hydro One shows one of the highest growth dynamics in its industry. Investors also speak of high momentum. The Growth Rank is based on consolidating four value indicators, with half of the indicators below and half above average for Hydro One. Capital Growth has a rank of 75, which means that currently professionals expect the company to grow its invested capital more than 42% of its competitors. Investors welcomed this, visible in the Stock Returns rank of 91 (above 91% of alternative investments). But Sales Growth has only a rank of 42, which means that, currently, professionals expect the company to grow less than 58% of its competitors, and Profit Growth is also low at a rank of 42. ...read more

RECOMMENDATION: The overall picture with a consolidated Growth Rank of 79, is a buy recommendation for growth and momentum investors. This is an ambiguous picture. Revenue growth and capital growth are strong, but the growth in profit, which seems good, can also be an indication that growth momentum may be negative. The fact that stock returns have been above average doesn't help much, as stock returns are less reliable in showing a company’s future growth potential. Prices may perform well for the simple reason that investors were too pessimistic in the past and are now correcting their opinions and moving the stock price to a more reasonable level. As the growth picture is mixed for Hydro One, investors may want to look at value and sentiment indicators for a well-rounded picture of this stock. While momentum is a popular investment factor, the value aspect might be the more important one, in the longer term. We recommend analyzing the stock with Obermatt’s Value, Safety, and Sentiment Ranks to arrive at a 360° View of the stock purchase case, especially since the growth performance is mixed here. ...read more

GROWTH METRICS 2021 2022 2023 2024
REVENUE GROWTH
REVENUE GROWTH
PROFIT GROWTH
PROFIT GROWTH
CAPITAL GROWTH
CAPITAL GROWTH
STOCK RETURNS
STOCK RETURNS
CONSOLIDATED RANK: GROWTH
CONSOLIDATED RANK: GROWTH

Last update of Growth Rank: 21-Mar-2024. Stock analysis on growth metrics: The higher the rank, the higher the growth and returns of Hydro One.


Safety Metrics in Detail

ANALYSIS: With an Obermatt Safety Rank of 73 (better than 73% compared with alternatives), the company Hydro One has financing practices on the safer side, which mean that their overall debt burden is lower than average. This doesn't mean that the business of Hydro One is safe, it only means that the company is on the safer side regarding possible bankruptcy, assuming that public reporting is correct. The Safety Rank is based on consolidating three financing indicators, with two out of three indicators above average for Hydro One. Leverage is at a rank of 60, meaning the company has a below-average debt-to-equity ratio. It has less debt than 60% of its competitors. Liquidity is also good at a rank of 81, meaning the company generates more profit to service its debt than 81% of its competitors. This indicates that the company is on the safer side when it comes to debt service. But Refinancing is lower at a rank of 45, which means that the portion of the debt that is about to be refinanced is above-average. It has more debt in the refinancing stage than 55% of its competitors. ...read more

RECOMMENDATION: With a consolidated Safety Rank of 73 (better than 73% compared with alternatives), Hydro One has a financing structure that is safer than that of its competitors. The refinancing issues could be a short-term problem, especially if the company has reputation issues. Banks and investors don't like to refinance debt if there are clouds on the horizon. For this reason, investors should look at the refinancing environment for Hydro One. Does it look safe that debt that is coming due can be covered with new debt? If that is the case, then the financing situation of the company is on the safer side. If not, it may be better to wait until refinancing has been completed and the Refinancing rank is good again. Investors may have a short-term debt challenge with Hydro One and should also compare Obermatt’s Value, Growth, and Sentiment Ranks before making a decision. ...read more

SAFETY METRICS 2021 2022 2023 2024
LEVERAGE
LEVERAGE
REFINANCING
REFINANCING
LIQUIDITY
LIQUIDITY
CONSOLIDATED RANK: SAFETY
CONSOLIDATED RANK: SAFETY

Last update of Safety Rank: 21-Mar-2024. Stock analysis on safety metrics: The higher the rank, the lower the leverage of Hydro One and the more cash is available to service its debt.


Sentiment Metrics in Detail

SENTIMENT 2021 2022 2023 2024
ANALYST OPINIONS
ANALYST OPINIONS
OPINIONS CHANGE
OPINIONS CHANGE
PRO HOLDINGS
PRO HOLDINGS
MARKET PULSE
MARKET PULSE
CONSOLIDATED RANK: SENTIMENT
CONSOLIDATED RANK: SENTIMENT

Last update of Sentiment Rank: 21-Mar-2024. Stock analysis on sentiment metrics: The higher the rank, the more positive the sentiment for Hydro One.
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Stock analysis by the purely fact based Obermatt Method for Hydro One from March 21, 2024.

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