ATCO (TSE:ACO.X) Posts Quarterly Earnings Results

ATCO (TSE:ACO.X) announced its earnings results 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 for 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 Trading Down 1.3%

Shares of ATCO stock opened at C$85.30 on Friday. The company has a quick ratio of 1.48, a current ratio of 1.42 and a debt-to-equity ratio of 131.63. ATCO has a 12-month low of C$52.48 and a 12-month high of C$86.67. The company has a market capitalization of C$8.61 billion, a price-to-earnings ratio of 53.31, a PEG ratio of 3.80 and a beta of 0.27. The firm’s 50-day moving average price is C$77.11 and its two-hundred day moving average price is C$71.49.

Analyst Ratings Changes

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

ATCO Company Profile

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.