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Highlights

  • Canadian holding company ATCO Ltd. (TSX: ACO.X) secures maximum revenue from its largest subsidiary of Canadian utilities.
  • ATCO has started full commercial operations at its Barlow solar project recently.
  • For Q2 2023, ATCO recorded industry beating margin profile and posted sequentially improving liquidity ratio.

Canadian holding company ATCO Ltd. (TSX: ACO.X) provides infrastructure, electric, and gas solutions through diverse primary segments, namely Utilities; Energy Infrastructure; Structures and Logistics; Neltume Ports and Corporate and Other. The company secures maximum revenue from its largest subsidiary of Canadian utilities which offers electricity, natural gas, and logistical services.

An insight into ATCO’s projects
ATCO has started full commercial operations at its Barlow solar project recently. For the Deerfoot solar project, the company is anticipating commencement of energization in Q3 2023, while the commercial operations at the project are likely to begin in Q4 2023. Once both the projects are 100% functional, ATCO will become host to the largest solar installations in Western Canada.

For Q2 2023, ATCO recorded industry beating margin profile and posted sequentially improving liquidity ratio. Additionally, there was a jump in the company’s capital expenditure, particularly in the renewable energy portfolio.

ATCO has surged its dividend distribution in the last few years. The company has announced a dividend of CAD 0.4756 per share for Q3 2023, to be paid in September 2023. ATCO’s dividend yield was 5.10% at the last closing price of CAD 37.80 as on August 16, 2023.

However, the company’s revenue dropped by 4.9% in Q2 2023, against Q2 2022. This was primarily because of the cost efficiencies produced by Electricity Distribution and Natural Gas Distribution over the second-generation Performance Base Regulation term got passed onto customers. Consequently, there was a decrease of approximately 11.9% in ATCO’s operating profit. Also, the earnings before income tax got reduced to CAD 175.0 million during the reporting period.

Top 10 Shareholders
Total 46.29% of the shareholdings of the company are held by the top ten shareholders. While Sentgraf Enterprises Ltd holds a maximum stake of about ­­­26.33%, RBC Global Asset Management Inc. owns around 6.38% of the total outstanding shares in ATOC.

Stock Price Performance
The company’s stock price has gone down by nearly 1.25% over the last one month, while it has dropped by approximately 14.11% in the last three months. The stock’s 52-week high and low price stand at CAD 48.46 and CAD 36.09, respectively.

Markets are trading in a highly volatile zone currently due to certain macroeconomic issues and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.

Note 1: Past performance is not a reliable indicator of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is August 16, 2023. The reference data in this report has been partly sourced from EODHD/Others.