HRNNF
Hydro One Limited
$42.34
Stable Earnings Power
85%
P/Adj-EPS × Normalized Multiple
Strong
·
Conviction
Overvalued
Trading 61.2% above fair value
You pay
$42.34
Bear
$22.98
Fair
$26.27
Bull
$29.55
Bear
$22.98
-45.7%
$1.64 × 14x P/E
Fair
$26.27
-38.0%
$1.64 × 16x P/E
Bull
$29.55
-30.2%
$1.64 × 18x P/E
Key Value Driver
Normalized P/E multiple (16x base case)
Implied Market Multiple
25.8x
Summary
Applying a 16x P/E to adjusted EPS of $1.64, the base-case value is $26.27 per share. DDM cross-check: $19.44.
Warnings
Dividend-based valuation: $19.44 (below our primary estimate by 26%). Large gaps may signal the dividend doesn't reflect full earning power.
Financial statements were converted from CAD into USD using USDCAD at 0.7095 USD per CAD.
Key Risks
- Growth DCF inappropriate — terminal value assumptions dominate
- EV/EBITDA misleading for regulated businesses where capex is mandated
- Regulatory risk is a fat tail not visible in normal multiples