Atco Ltd. (ACLLF, Financial) has recently been the subject of new analysis by TD Securities. Analyst John Mould has initiated coverage of the stock with a Hold rating, setting a price target at C$56. The firm anticipates that Atco's growth trajectory will be less dynamic compared to its utility sector counterparts. Currently, the stock's valuation is considered balanced, reflecting its market performance.
ACLLF Key Business Developments
Release Date: May 07, 2025
- Adjusted Earnings: $160 million in Q1 2025, up $12 million and 8% from the previous year.
- Canadian Utilities Earnings Growth: Driven by rate-based growth within regulated utilities.
- Atco Structures Adjusted Earnings: $26 million in Q1 2025, $2 million higher than the prior year.
- Atco Structures Adjusted EBITDA: $62 million, an increase of $7 million compared to the previous year.
- Cash Flow from Operating Activities: $120 million in Q1 2025, up from $52 million in the prior year.
- Atco Investments Adjusted Earnings Growth: $3 million increase from Neltume Ports investment.
- Global Space Rentals Business Growth: 9 new branch locations over 5 years, fleet size increased by 53% to over 25,000 units.
- Average Rental Rate Growth: 46% increase while maintaining a 74% utilization rate.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Atco Ltd (ACLLF, Financial) reported a strong start to 2025 with adjusted earnings of $160 million, an 8% increase from the previous year.
- The company saw growth in its Atco Structures segment, with adjusted earnings of $26 million, driven by increased workforce housing sales in Australia.
- Atco Investments segment showed positive growth, particularly from its 40% equity investment in Neltume Ports, which delivered $3 million in adjusted earnings growth.
- Cash flow from operating activities increased significantly to $120 million in Q1 2025, up from $52 million in the prior year, supporting operations and capital programs.
- Atco Structures expanded its global footprint by opening a new manufacturing and commercial operations facility in Adelaide, South Australia, enhancing its ability to meet customer needs across Australia.
Negative Points
- The Alberta Utilities allowable ROE was reset from 9.28% in 2024 to 8.97% for 2025, presenting a potential challenge for earnings growth.
- The efficiency carryover mechanism awarded in 2023 and 2024 came to an end, which could impact future cost savings.
- There is uncertainty regarding the impact of tariffs on margins, particularly in the North American operations, which could affect profitability.
- The integration of recent acquisitions, such as NRB Modular Solutions, may take time before contributing positively to revenue growth.
- The macroeconomic environment remains uncertain, posing potential risks to Atco Ltd (ACLLF)'s growth and expansion plans.
