Hydro One Limited Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Predictions
A week ago, Hydro One Limited (TSE:H) came out with a strong set of quarterly numbers that could potentially lead to a re-rate of the stock. The company beat expectations with revenues of CA$2.3b arriving 2.4% ahead of forecasts. Statutory earnings per share (EPS) were CA$0.62, 7.8% ahead of estimates. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.
Following last week's earnings report, Hydro One's ten analysts are forecasting 2026 revenues to be CA$9.53b, approximately in line with the last 12 months. Statutory per share are forecast to be CA$2.34, approximately in line with the last 12 months. Yet prior to the latest earnings, the analysts had been anticipated revenues of CA$9.39b and earnings per share (EPS) of CA$2.31 in 2026. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.
See our latest analysis for Hydro One
The analysts reconfirmed their price target of CA$57.70, showing that the business is executing well and in line with expectations. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values Hydro One at CA$61.00 per share, while the most bearish prices it at CA$47.00. This is a very narrow spread of estimates, implying either that Hydro One is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. We would highlight that Hydro One's revenue growth is expected to slow, with the forecast 0.3% annualised growth rate until the end of 2026 being well below the historical 5.2% 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 6.9% annually. Factoring in the forecast slowdown in growth, it seems obvious that Hydro One is also expected to grow slower than other industry participants.
The Bottom Line
The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that Hydro One's revenue is expected to perform worse than the wider industry. The consensus price target held steady at CA$57.70, with the latest estimates not enough to have an impact on their price targets.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple Hydro One analysts - going out to 2028, and you can see them free on our platform here.
Even so, be aware that Hydro One is showing 2 warning signs in our investment analysis , and 1 of those is potentially serious...
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