ATCO (TSE:ACO.X) Announces Earnings Results

ATCO (TSE:ACO.X) released its quarterly earnings data on Friday. The company reported C$1.00 EPS for the quarter, FiscalAI reports. ATCO had a net margin of 8.16% and a return on equity of 8.54%. The company had revenue of C$1.33 billion during the quarter.

Here are the key takeaways from ATCO’s conference call:

• ATCO reported third-quarter adjusted earnings of CAD 112 million, or CAD 1.00 per share, up about 9% year over year. Growth was driven by ATCO Structures’ space rentals and Stibnite Gold Project earnings, along with contributions from Australian and Alberta utilities.
• ATCO highlighted its announced merger with Emera: shareholders are expected to receive 0.865 Emera shares and one share in a new standalone ATCO for each existing ATCO share. Management expects the combined utility to provide approximately 20% higher dividend income for ATCO shareholders, while the new ATCO would retain its housing, defense-services, and investment businesses.
• Outside Canadian Utilities, ATCO’s portfolio generated 15% year-over-year earnings growth; Structures & Logistics earnings rose CAD 8 million to CAD 40 million, and standalone-business operating cash flow increased CAD 25 million to CAD 109 million. Management cited stronger space rentals, modular construction sales, and Frontec’s remote-base-camp work.
• Management pointed to potential growth in modular housing, U.S. manufacturing, Arctic defense infrastructure, and Neltume Ports, including a new Brazil terminal project and increased ownership of a Chilean port. It said it is assessing additional manufacturing capacity, particularly in the U.S., though these opportunities depend on projects progressing.
• Some anticipated Canadian defense contracts have been delayed by changes to federal procurement processes, with management expecting them potentially within the next six months. It also cautioned that labor shortages in the North could raise costs and offset some potential margin gains from increased demand.

ATCO Stock Down 1.3%

ACO.X traded down C$1.16 during trading on Friday, reaching C$85.30. 399,019 shares of the stock traded hands, compared to its average volume of 287,921. The stock’s 50-day simple moving average is C$77.11 and its two-hundred day simple moving average is C$71.49. ATCO has a fifty-two week low of C$52.48 and a fifty-two week high of C$86.67. The stock has a market cap of C$8.61 billion, a price-to-earnings ratio of 53.31, a price-to-earnings-growth ratio of 3.80 and a beta of 0.27. The company has a debt-to-equity ratio of 131.63, a current ratio of 1.42 and a quick ratio of 1.48.

Analysts Set New Price Targets

Several brokerages recently commented on ACO.X. Canadian Imperial Bank of Commerce reduced their price objective on shares of ATCO from C$88.00 to C$85.00 in a research note on Tuesday, September 22nd. Royal Bank Of Canada boosted their price objective on shares of ATCO from C$80.00 to C$94.00 and gave the stock a “sector perform” rating in a report on Thursday, October 8th. Scotiabank raised their price objective on ATCO from C$70.00 to C$79.00 and gave the stock a “sector perform” rating in a research note on Tuesday, July 21st. National Bank Financial lifted their target price on ATCO from C$79.00 to C$93.00 and gave the company a “sector perform” rating in a research note on Thursday, October 8th. Finally, BMO Capital Markets upped their price objective on ATCO from C$72.00 to C$85.00 and gave the stock an “outperform” rating in a research note on Thursday, July 30th. One equities research analyst has rated the stock with a Buy rating and five have issued a Hold rating to the company. According to data from MarketBeat.com, ATCO presently has a consensus rating of “Hold” and an average price target of C$81.86.

About ATCO

As a global enterprise, ATCO Ltd. and its subsidiary and affiliate companies have approximately 20,000 employees and assets of $28 billion. ATCO is focused on delivering essential solutions across the housing, energy and defence sectors, helping build, power and protect a future everyone can count on. ATCO Structures delivers innovative modular solutions that help communities address growing housing demand while supporting industry and economic growth. Canadian Utilities, an ATCO subsidiary, delivers safe and reliable energy services through its utilities, midstream and generation businesses.