HRNNF
Hydro One Limited
$42.78
Stable Earnings Power
85%
P/Adj-EPS × Normalized Multiple
Strong
·
Conviction
Overvalued
Trading 59.6% above fair value
You pay
$42.78
Bear
$23.45
Fair
$26.80
Bull
$30.15
Bear
$23.45
-45.2%
$1.68 × 14x P/E
Fair
$26.80
-37.3%
$1.68 × 16x P/E
Bull
$30.15
-29.5%
$1.68 × 18x P/E
Key Value Driver
Normalized P/E multiple (16x base case)
Implied Market Multiple
25.5x
Summary
Applying a 16x P/E to adjusted EPS of $1.68, the base-case value is $26.80 per share. DDM cross-check: $19.71.
Warnings
Dividend-based valuation: $19.71 (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 0.7240 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