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1. Company Snapshot

1.a. Company Description

Hydro One Limited, through its subsidiaries, operates as an electricity transmission and distribution company in Ontario.It operates through three segments: Transmission Business, Distribution Business, and Other.The company owns and operates approximately 30,000 circuit kilometers of high-voltage transmission lines and 125,000 circuit kilometers of primary low-voltage distribution network.


It serves approximately 1.5 million residential, small business, commercial, and industrial customers.The company also provides telecommunications support services for its transmission and distribution businesses; and information and communications technology services and solutions.Hydro One Limited was incorporated in 2015 and is headquartered in Toronto, Canada.

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1.b. Last Insights on H

Hydro One Limited's recent performance was driven by strong Q2 earnings, beating expectations due to higher revenues. The company's profit rose 12% to C$327M, fueled by increased Ontario rates and electricity demand. Investments in grid upgrades totaled C$913M, supporting long-term energy growth. A quarterly dividend of $0.3331 per share was declared, showcasing the company's commitment to shareholders. Strategic initiatives, such as the St. Clair Transmission Line project, demonstrate Hydro One's focus on modernizing Canada's power systems and meeting growing energy demands.

1.c. Company Highlights

2. Hydro One's Q3 2025 Earnings: A Strong Performance

Hydro One delivered a robust financial performance in Q3 2025, with basic earnings per share (EPS) of $0.70, surpassing the estimated EPS of $0.3396. Revenues net of purchased power increased by 7% year-over-year, driven by higher 2025 approved Ontario Energy Board (OEB) rates and higher average monthly peak demand. The Transmission segment saw a 9.4% year-over-year revenue increase, primarily due to higher average monthly peak demand and OEB-approved rates. Distribution revenues net of purchased power rose by 4.2% year-over-year, driven by changes in OEB-approved rates for 2025.

Publication Date: Nov -15

📋 Highlights
  • EPS Growth:: Basic earnings per share rose to $0.70 from $0.62 YoY (12.9% increase).
  • Revenue Growth:: Total revenues net of purchased power increased 7% YoY ($0.62 to $0.70 EPS driver), with Transmission up 9.4% and Distribution up 4.2%.
  • Capital Investments:: $472M allocated for the St. Clair transmission line project, in-service by 2028.
  • Debt Issuance:: $1.1B raised via medium-term notes, including 3.94% (2032), 4.3% (2035), and 4.95% (2055) bonds, driving 8.9% higher interest expense YoY.
  • Dividend Guidance:: $0.3331/share dividend declared, maintaining 6–8% EPS growth guidance despite YTD outperformance due to cautious load forecasting.

Segmental Performance

The Transmission segment's revenue growth was driven by a higher average monthly peak demand and OEB-approved rates. The Distribution segment saw a 4.2% year-over-year increase in revenues net of purchased power, driven by changes in OEB-approved rates for 2025. Operating, maintenance, and administration expenses in the quarter were higher by 0.7% compared to the same period last year.

Cost Management

In the Transmission segment, costs were lower by 3.5%, mainly due to lower work program expenditures, including vegetation management expenditures. In the Distribution segment, costs were higher by 5.8%, mainly due to higher corporate support costs resulting from lower capitalized overheads and higher bad debt expense. Depreciation, amortization, and asset removal expenses for the third quarter were higher by 3.4% year-over-year.

Valuation and Outlook

With a P/E Ratio of 25.73 and a P/B Ratio of 2.61, the market is pricing in a certain level of growth for Hydro One. Analysts estimate revenue growth at 2.8% for next year. The company's guidance of 6% to 8% earnings per share growth is based on its internal assumptions. Hydro One's recent debt issuance and plans for future investments, including a substantial US program, are expected to support its growth.

Dividend and ROE

The company's Board of Directors declared a dividend of $0.3331 per share, payable to common shareholders of record on December 10, 2025. Hydro One's allowed return on equity (ROE) is locked in for a couple of years, and the recent cost of capital update from the OEB has shaken out to be 25 basis points below their current ROE.

3. NewsRoom

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New report finds 50 per cent of youth athletes in Ontario say their coach is the adult they trust the most in their lives, yet hazing remains a widespread issue

Nov -25

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Ontario Approves Hydro One Plan for New 500-kV Transmission Line to GTA

Nov -24

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Ontario selects Hydro One to invest in priority transmission line in partnership with First Nations

Nov -24

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Is Hydro One Still a Good Value After 23% Share Price Surge in 2025?

Nov -22

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HYDRO ONE PROFESSIONAL EMPLOYEES FILE FOR CONCILIATION

Nov -20

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Hydro One Priced Offering of $1.6 Billion Medium Term Notes Under Sustainable Financing Framework

Nov -19

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Hydro One seeks approval to build the Welland Thorold Power Line

Nov -17

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Hydro One (TSX:H): Evaluating the Utility’s Valuation After Recent Share Price Momentum

Nov -16

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4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (2.78%)

6. Segments

Distribution

Expected Growth: 2.5%

Hydro One's 2.5% distribution growth is driven by its regulated transmission and distribution business, which provides a stable source of cash flow. Additionally, the company's investments in grid modernization and renewable energy projects are expected to contribute to growth. Furthermore, Hydro One's strong balance sheet and ability to manage costs effectively also support its distribution growth.

Transmission

Expected Growth: 3.5%

Transmission from Hydro One Limited's 3.5% growth driven by increasing electricity demand, infrastructure upgrades, and grid modernization. Additionally, Ontario's growing population and economic expansion contribute to rising energy needs, while Hydro One's investments in renewable energy sources and grid resiliency further support growth.

Other

Expected Growth: 2.0%

Hydro One's 2.0% growth is driven by increasing electricity transmission and distribution rates, investments in grid modernization, and rising demand for renewable energy sources. Additionally, the company's focus on operational efficiency and cost savings initiatives contribute to its growth. Furthermore, Hydro One's expansion into new markets and services, such as telecommunications and fibre optics, also support its growth momentum.

7. Detailed Products

Transmission Services

Hydro One's transmission services provide high-voltage transmission lines and towers that transport electricity from generating stations to local distribution systems.

Distribution Services

Hydro One's distribution services provide low-voltage distribution lines and equipment that deliver electricity from the transmission system to homes and businesses.

Generation Services

Hydro One's generation services provide electricity from hydroelectric, wind, and thermal generating stations.

Energy Storage

Hydro One's energy storage solutions provide innovative battery storage systems to optimize energy usage and reduce peak demand.

Smart Grid Solutions

Hydro One's smart grid solutions provide advanced technologies to manage and optimize the distribution grid, improving efficiency and reliability.

Electricity Infrastructure Development

Hydro One's electricity infrastructure development services provide planning, design, and construction of new transmission and distribution infrastructure.

8. Hydro One Limited's Porter Forces

Forces Ranking

Threat Of Substitutes

Hydro One Limited operates in a highly regulated industry, and the threat of substitutes is moderate. While there are alternative energy sources available, the cost and feasibility of switching to these alternatives are high.

Bargaining Power Of Customers

Hydro One Limited's customers have limited bargaining power due to the lack of alternative energy providers in the region. This gives the company a significant advantage in negotiating prices and contracts.

Bargaining Power Of Suppliers

Hydro One Limited relies on a few large suppliers for its equipment and materials. While these suppliers have some bargaining power, the company's large scale of operations and long-term contracts mitigate this risk.

Threat Of New Entrants

The threat of new entrants in the electricity transmission and distribution industry is low due to the high barriers to entry, including significant capital requirements and regulatory hurdles.

Intensity Of Rivalry

The electricity transmission and distribution industry is highly competitive, with several players competing for market share. Hydro One Limited faces intense rivalry from other utilities and independent power producers.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 57.34%
Debt Cost 4.85%
Equity Weight 42.66%
Equity Cost 5.41%
WACC 5.09%
Leverage 134.43%

11. Quality Control: Hydro One Limited passed 4 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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OGE Energy

A-Score: 6.8/10

Value: 5.5

Growth: 4.1

Quality: 5.6

Yield: 8.0

Momentum: 7.5

Volatility: 10.0

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Evergy

A-Score: 6.7/10

Value: 5.5

Growth: 4.7

Quality: 4.7

Yield: 7.0

Momentum: 8.5

Volatility: 10.0

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Fortis

A-Score: 6.6/10

Value: 5.5

Growth: 4.4

Quality: 4.5

Yield: 7.0

Momentum: 8.0

Volatility: 10.0

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FirstEnergy

A-Score: 6.4/10

Value: 5.7

Growth: 3.6

Quality: 4.6

Yield: 8.0

Momentum: 6.5

Volatility: 10.0

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Hydro One

A-Score: 6.1/10

Value: 4.5

Growth: 4.7

Quality: 4.1

Yield: 5.0

Momentum: 8.0

Volatility: 10.0

1-Year Total Return ->

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Avangrid

A-Score: 5.2/10

Value: 6.2

Growth: 4.3

Quality: 3.8

Yield: 5.0

Momentum: 5.0

Volatility: 6.7

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

53.05$

Current Price

53.05$

Potential

-0.00%

Expected Cash-Flows