Is it a good company at a reasonable price? This stock has not done much for Shareholder over past 5 and 10 years, so you have to wonder. Return on Equity (ROE) has also gone down over this period from 14% to 15% to 7% and 8%. It is not a bad ROE for a utility. Dividends are good around 3% plus with the company still increasing them with DPR in an ok range. A plus is insiders increasing their shares over the past year. The stock price went up some 23% last year and is up by 7% so far this year. My stock price testing is saying that the stock price is reasonable.
I do not own this stock of ATCO Ltd (TSX-ACO.X, OTC-ACLLF). I started to look at this stock in 2009 because it was a dividend paying stock that was on everyone’s list. At that time this stock was on the Dividend Achievers list, the Dividend Aristocrats list and also was on Mike Higgs’ list. ATCO (TSX-ACO-X) owns 52.3% (2021) Canadian Utilities (TSX-CU), so you would not buy both these stocks.
When I was updating my spreadsheet, I noticed total return has been low over the past 5 and 10 years at 2.88% and 3.24%. Revenues have increased but at a low level. Revenue has increased over the past 5 and 10 years at 0.98% and 0.82%. Revenue per Share is a bit better at 1.42% and 1.08% because of share buy backs. On the other hand, most of the insiders that I follow bought shares in the last year.
If you had invested in this company in December 2014, for $1,000.86 you would have bought 21 shares at $47.66 per share. In December 2024, after 10 years you would have received $331.97 in dividends. The stock would be worth $999.18. Your total return would have been $1.331.15. This would be a total return of 3.24% per year with 0.02% from capital loss and 3.26% from dividends.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $47.66 | $1,000.86 | 21 | 10 | $331.97 | $999.18 | $1,331.15 |
The current dividend yield is moderate with dividend growth low. The current dividend yield is moderate (2% to 4% ranges) at 3.96%. The 5, 10 and historical dividend yields are also moderate at 4.37%, 3.96% and 2.22%. The dividend growth is low (below 8% per year) at 3.9% per year over the past 5 years. The last dividend increase was in 2025 and it was for 3%.
The Dividend Payout Ratios (DPR) are fine. The DPR for 2024 for Earnings per Share (EPS) is fine at 51% with 5 year coverage a little high at 61%. The DPR for 2024 for Adjusted Earnings per Share (AEPS) is good at 46% with 5 year coverage fine at 51%. The DPR for 2024 for Cash Flow per Share (CFPS) is good at 10% with 5 year coverage at 11%. The DPR for 2024 for Free Cash Flow (FCF) is non-calculable because of a negative FCF with 5 year coverage high at 133%. There is no agreement on what the FCF and it ranges from $506M to a negative $30M for 2024.
| Item | Cur | 5 Years |
|---|---|---|
| EPS | 51.15% | 60.65% |
| AEPS | 45.73% | 51.20% |
| CFPS | 10.33% | 10.66% |
| FCF | -733.33% | 133.04% |
Debt Ratios are showing that the company has a lot of debt. The Long Term Debt/Market Cap Ratio for 2024 is very high at 2.15 and currently at 2.05. However, we need also to look at the Long Term Debt/Covering Assets Ratio for 2024 which is fine at 0.53 and currently at 0.53 because this is a more important ratio for a Utility. The Liquidity Ratio for 2024 is fine at 1.38 and 1.61 currently. If you added in Cash Flow after dividends, the ratios are fine at 2.65 and currently at 3.38. The Debt Ratio for 2024 is fine at 1.48 and 1.49 currently. The Leverage and Debt/Equity Ratios for 2024 are too high at 3.07 and 1.48 and currently at 3.03 and 1.49.
| Type | Year End | Ratio Curr |
|---|---|---|
| Lg Term A | 0.53 | 0.53 |
| Lg Term R | 2.15 | 2.05 |
| Intang/GW | 0.25 | 0.23 |
| Liquidity | 1.38 | 1.61 |
| Liq. + CF | 2.65 | 3.38 |
| Debt Ratio | 1.48 | 1.49 |
| Leverage | 3.07 | 3.03 |
| D/E Ratio | 1.48 | 1.49 |
The Total Return per year is shown below for years of 5 to 36 to the end of 2024. Under the Capital Gain column is the portion of the Total Return attributable to capital gains. Under the Dividend column is the portion of the Total Return attributable to dividends. See chart below.
| From | Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|---|
| 2019 | 5 | 3.89% | 2.88% | -0.90% | 3.77% |
| 2014 | 10 | 8.58% | 3.24% | -0.02% | 3.26% |
| 2009 | 15 | 9.53% | 8.53% | 4.94% | 3.59% |
| 2004 | 20 | 8.99% | 9.59% | 6.08% | 3.52% |
| 1999 | 25 | 9.56% | 10.79% | 7.14% | 3.64% |
| 1994 | 30 | 11.88% | 12.64% | 8.60% | 4.03% |
| 1989 | 35 | 11.05% | 12.18% | 8.59% | 3.59% |
| 1988 | 36 | 10.73% | 13.33% | 9.34% | 3.99% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are 12.40, 13.67 and 14.94. The corresponding 10 year ratios are 12.35, 14.07 and 16.21. The corresponding historical ratios are 9.04, 10.59 and 12.31. The current P/E Ratio is 12.02 based on a stock price of $50.95 and EPS estimate for 2025 of $4.24. The current ratio is below the low ratio of the 10 year median ratios. This stock price testing suggests that the stock price is relatively cheap.
I also have Adjusted Earnings per Share (AEPS) data. The 5-year low, median, and high median Price/Adjusted Earnings per Share Ratios are 9.14, 11.96 and 13.07. The corresponding 10 year ratios are 10.88, 13.15 and 15.15. The corresponding historical ratios are 10.85, 12.96 and 14.55. The current P/AEPS Ratio is 11.37 based on a stock price of $50.95 and EPS estimate for 2025 of $4.48. The current ratio is below the low ratio of the 10 year median ratios. This stock price testing suggests that the stock price is relatively cheap.
I get a Graham Price of $65.18. The 10-year low, median, and high median Price/Graham Price Ratios are 0.72, 0.84 and 0.98. The current P/GP Ratio is 0.78 based on a stock price of $50.95. This ratio is between the low and median ratios of the 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get a 10-year median Price/Book Value per Share Ratio of 1.20. The current ratio is 1.21 based on a Book Value of $4,730M, Book Value per Share of $42.14 and a stock price of $50.95. The current ratio is 1% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median.
I get a 10-year median Price/Cash Flow per Share Ratio of 2.63. The current ratio is 2.56 based on Cash Flow per Share estimate for 2025 of $19.91 and a stock price of $50.95. The current ratio is 2.5% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get an historical median dividend yield of 2.22%. The current dividend yield is 3.96% based on dividends of $2.018 and a stock price of $50.95. The current dividend yield is at the 10 year median dividend yield. This stock price testing suggests that the stock price is relatively cheap.
I get a 10 year median dividend yield of 3.96%. The current dividend yield is 3.96% based on dividends of $2.018 and a stock price of $50.95. The current dividend yield is 78% above the historical median dividend yield. This stock price testing suggests that the stock price is relatively reasonable and at the median.
The 10-year median Price/Sales (Revenue) Ratio is 1.09. The current P/S Ratio is 1.05 based on Revenue estimate for 2025 of $4,421M, Revenue per Share of $48.30 and a stock price of $50.95. The current ratio is 3.3% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median.
Results of stock price testing is that the stock price is probably reasonable. The 10 year dividend yield test says it is reasonable. The historical dividend yield tests says that the stock is relatively cheap. The P/S Ratio test says that the stock is reasonable and below the median. Other testing is saying that the stock price is cheap to reasonable.
When I look at analysts’ recommendations, I find Strong Buy (3) and Hold (4). The consensus would be a Buy. The 12 month stock price consensus is $55.71 with a high of $63.00 and low of $50.00. The consensus stock price of $55.71 implies a total return of 13.30% with 9.34% from capital gains and 3.96% from dividends based on a current stock price of $50.95.
There are few analysts following this stock on Stock Chase. The one entry for 2025 gives it a Hold and says she prefers TFS and EMA. Jitendra Parashar on Motley Fool thinks this is a safe stock for passive income. Motley Fool says this stock shows stability, consistency, income and growth. The company put out a Press Release about their fourth quarter of 2024. The company put out a press release via Newswire about their second quarter of 2025.
There is an interesting note from Newswire via Yahoo Finance about a pipeline approval. Simply Wall Street via Yahoo Finance looks at this company’s Return on Equity (ROE) and says it is not particularly good, nor bad. Simply Wall Street has one warning of interest payments are not well covered by earnings.
ATCO Ltd is a Canada-based diversified company. The company has a Structures & Logistics segment, an equity interest in Neltume Ports S.A and a Retail Energy segment Its Canadian Utilities Limited segment includes ATCO Energy Systems, ATCO EnPower, and ATCO Australia. It generates maximum revenue from the ATCO Energy Systems segment. Its web site is here ATCO Ltd.
The last stock I wrote about was about was Exchange Income Corp (TSX-EIF, OTC-EIFZF) ... learn more. The next stock I will write about will be Capital Power Corp (TSX-CPX, OTC-CPRHF) ... learn more on Wednesday, September 03, 2025 around 5 pm. Tomorrow on my other blog I will write about Dividend Stocks September 2025 … learn more on Tuesday, September 2, 2025 around 5 pm.
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