Nucor earnings beat by $0.08, revenue fell short of estimates
On Friday, BMO Capital Markets increased the price target for ATCO Ltd (ACO/X:CN) (OTC: ACLLF) to Cdn$56.00, up from the previous Cdn$52.00, while keeping an Outperform rating on the stock. The adjustment follows ATCO’s fourth-quarter earnings report for 2024, which highlighted the company’s growing growth trajectory. The company, with a market capitalization of $3.97 billion, demonstrated solid revenue growth of 4.24% in the last twelve months.
Ben Pham, an analyst at BMO Capital, noted that ATCO is experiencing strong momentum across its operations. The company’s utility rate base growth expectations have been raised, and its Structures division is entering 2025 with more strength than it had in 2024. Furthermore, Neltume, a port services business in which ATCO has a stake, continues to deliver reliable earnings. According to InvestingPro, ATCO maintains a GOOD financial health score of 2.81, with liquid assets exceeding short-term obligations.
Despite these positive developments, Pham observed that ATCO’s shares are trading at a significant discount compared to its utility peers. He pointed out that ATCO’s shares are valued at approximately 11 times the projected earnings for 2026, while the average for peer companies stands at 17 times. InvestingPro data shows the stock currently trades at a P/E ratio of 12.69x and offers an attractive dividend yield of 4.3%, having raised its dividend for 31 consecutive years.
The analyst’s comments underscored the rationale behind maintaining the Outperform rating and the decision to elevate the price target. Pham’s statement highlighted the company’s solid performance and the potential for upward movement in its stock price, given the discount relative to its peers.
ATCO Ltd, based in Canada, is a diversified global corporation engaged in structures & logistics, utilities, energy infrastructure, retail energy, and transportation. The company’s strong performance in the fourth quarter of 2024 has set a positive tone for its prospects in 2025.
In other recent news, ATCO Gas has seen its outlook revised from stable to positive by S&P Global Ratings. This change follows the implementation of new tariffs for gas distribution, effective January 1, 2025, which have increased revenue allowances by nearly 65% compared to the previous regulatory period. S&P Global Ratings has affirmed its ’BBB+’ long-term issuer credit ratings for ATCO Gas Australia Networks Pty. Ltd. and ATCO Gas Australia Pty Ltd. The rating agency forecasts an improvement in ATCO Gas’ funds from operations (FFO) to debt ratio, expecting it to rise above 13% by the end of fiscal 2027, up from the near-term forecast of 10%-11%. This improvement is attributed to stronger cash flow and credit metrics anticipated in the coming years. ATCO Gas is expected to maintain a stable regulatory regime and cash flow visibility with known tariffs until 2029. The company’s liquidity remains adequate, with no debt maturities for the next 12-18 months. Despite the possibility of a modest increase in debt, the company has maintained strong credit metrics, supported by a stable regulatory environment.
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