Hydro One Corporate Finance Report

This FNCE 451 semester project evaluated Hydro One Limited through the required corporate finance lenses of stock price assessment, cost of capital, capital structure, and payout policy. The assignment required a publicly traded Canadian non-financial firm with long-term debt, making Hydro One a strong fit because its value is driven by regulated rate base investment, allowed ROE, and capital allocation decisions.

The report concluded that Hydro One is a high-quality regulated utility, but that quality appeared fully priced. As of April 2026, Hydro One traded at premium peer multiples while a Gordon Growth Model implied an intrinsic value of approximately C$51.64 against a market price of C$58.94, supporting a fair-to-slightly-expensive assessment.

The analysis estimated a 5.48% cost of equity using CAPM, DDM, and BYPRP methods, a 3.61% after-tax cost of debt, and a current-market WACC of 4.82%. It also compared Hydro One’s market-value capital structure with the Ontario Energy Board deemed structure and assessed whether the dividend policy was sustainable for a capital-intensive regulated utility.