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Hydro One Limited (TSE:H) came out with its yearly results last week, and we wanted to see how the business is performing and what industry forecasters think of the company following this report. It was a workmanlike result, with revenues of CA$8.5b coming in 3.5% ahead of expectations, and statutory earnings per share of CA$1.92, in line with analyst appraisals. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
See our latest analysis for Hydro One
Following the latest results, Hydro One's eleven analysts are now forecasting revenues of CA$8.69b in 2025. This would be an okay 2.5% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to rise 6.4% to CA$2.05. Yet prior to the latest earnings, the analysts had been anticipated revenues of CA$8.51b and earnings per share (EPS) of CA$2.04 in 2025. So it looks like there's been no major change in sentiment following the latest results, although the analysts have made a modest lift to to revenue forecasts.
It may not be a surprise to see thatthe analysts have reconfirmed their price target of CA$44.88, implying that the uplift in revenue is not expected to greatly contribute to Hydro One's valuation in the near term. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on Hydro One, with the most bullish analyst valuing it at CA$47.00 and the most bearish at CA$38.00 per share. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or thatthe analysts have a strong view on its prospects.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. We would highlight that Hydro One's revenue growth is expected to slow, with the forecast 2.5% annualised growth rate until the end of 2025 being well below the historical 4.3% p.a. growth over the last five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 5.2% annually. Factoring in the forecast slowdown in growth, it seems obvious that Hydro One is also expected to grow slower than other industry participants.