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1. Company Snapshot

1.a. Company Description

Capital Power Corporation develops, acquires, owns, and operates renewable and thermal power generation facilities in Canada and the United States.It generates electricity from various energy sources, including wind, solar, waste heat, natural gas, and coal.The company owns an approximately 6,600 megawatts of power generation capacity at 26 facilities.


It also manages its related electricity, natural gas, and emissions portfolios by undertaking trading and marketing activities.The company was founded in 1891 and is headquartered in Edmonton, Canada.

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1.b. Last Insights on CPX

Capital Power Corporation's recent performance was driven by strategic growth initiatives, including the execution of a new long-term contract for Midland Cogeneration Venture through to 2040, with improved economic terms. The company also commissioned 170 MW of battery storage in Ontario. Additionally, a new long-term contract with Consumers Energy for a Michigan plant added US$100 million in annual EBITDA. The company declared dividends for its Common and Preference shares. A C$600 million medium term note offering was also announced.

1.c. Company Highlights

2. Capital Power's 2025 Earnings: A Strong Year for Renewable Energy

Capital Power reported a robust financial performance for 2025, with adjusted EBITDA increasing by 18% to $1.58 billion, driven by the acquisition of 2.2 gigawatts of generation capacity and optimized contracts across 2 gigawatts of contracted capacity. The company's AFFO also saw a significant jump of 29% to $1.07 billion. However, the actual EPS came out at -$0.12, missing estimates of $0.495. Revenue growth is expected to continue, with analysts estimating a 5.0% increase for the next year.

Publication Date: Mar -06

📋 Highlights
  • Strategic Acquisitions & Portfolio Expansion: Acquired 2.2 GW via PJM acquisition and optimized 2 GW of contracted capacity, enhancing generation scale and diversification.
  • Record Power Generation: Achieved 45 terawatt-hours of generation, with 52% from U.S. assets, reflecting operational excellence and geographic diversification.
  • Financial Growth: Adjusted EBITDA rose 18% to $1.58 billion, and AFFO increased 29% to $1.07 billion year-over-year, driven by optimized assets and contracted cash flows.
  • Commercial Optimization & Contracting: Secured a 2040 contract extension at Hummel/Rolling Hills, adding 10 years of incremental cash flow, and targets $1 billion EBITDA from U.S. recontracting opportunities.

Operational Highlights

The company's operations team delivered an outstanding performance, generating a record 45 terawatt hours of power across its portfolio, with 52% of total generation coming from its U.S. portfolio. Capital Power's focus on asset optimization and commercial optimization has been instrumental in driving incremental value, as evident from the new contract for MCV announced last fall, which extends through 2040 and provides 10 years of incremental contracted cash flow.

Strategic Priorities

Capital Power remains committed to disciplined growth, supporting the dividend, and maintaining balance sheet strength. The company is reaffirming its 2026 guidance, reflecting the strength of its platform, a larger and more diversified fleet, and increased exposure to U.S. flexible generation. As Avik Dey stated, "We're seeing a broader opportunity set beyond PJM and ERCOT," highlighting the company's ability to capitalize on emerging trends.

Valuation Metrics

Using the available valuation metrics, we can assess what's priced into Capital Power's stock. The P/E Ratio stands at 61.33, indicating a relatively high valuation. The EV/EBITDA ratio is 23.75, suggesting that the company's enterprise value is roughly 23.75 times its EBITDA. The Dividend Yield is 4.27%, providing a relatively attractive return for income investors. With a Net Debt / EBITDA ratio of 9.71, the company's leverage is a consideration, but its ROIC is -2.82%, indicating room for improvement in returns on invested capital.

Growth Opportunities

Capital Power is actively evaluating multiple recontracting opportunities in the U.S., with a target of capturing $1 billion of adjusted EBITDA opportunity. The partnership with Apollo opens up incremental opportunities, and the company is optimistic about the progress on the regulatory framework for additional data center load in Alberta. As the company continues to execute on its strategic priorities, it is well-positioned to capitalize on emerging trends in the renewable energy sector.

3. NewsRoom

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What Capital Power (TSX:CPX)'s Record Generation, U.S. Expansion and New CFO Mean For Shareholders

Mar -05

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Capital Power Corp (CPXWF) Q4 2025 Earnings Call Highlights: Record Generation and Strategic ...

Mar -04

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Capital Power Q4 Earnings Call Highlights

Mar -04

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Capital Power Swings to Net Loss in Q4 and Misses Analysts' Forecasts

Mar -04

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Capital Power reports fourth quarter and year-end 2025 results

Mar -04

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Capital Power declares dividends for its Common and Preference shares

Mar -03

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Kevin MacIntosh Named CFO As Capital Power Targets Valuation Gap

Feb -23

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Capital Power Appoints Kevin MacIntosh as CFO

Feb -19

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4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (7.37%)

6. Segments

Energy

Expected Growth: 7.3%

Capital Power Corporation's 7.3% energy growth is driven by increasing demand for clean energy, strategic acquisitions, and investments in renewable energy sources such as wind and solar power. Additionally, favorable government policies and regulations supporting the transition to a low-carbon economy contribute to the company's growth momentum.

Emission Credit

Expected Growth: 10.8%

Capital Power Corporation's 10.8% growth in Emission Credits is driven by increasing demand for carbon offsetting, government incentives for renewable energy, and strategic acquisitions. Additionally, the company's diversified portfolio of emission-reducing projects and strong operational efficiency contribute to its growth momentum.

7. Detailed Products

Electricity Generation

Capital Power Corporation generates electricity through its various power plants, including natural gas, coal, and renewable energy sources.

Wholesale Electricity Sales

The company sells excess electricity to other market participants, such as utilities, retailers, and other generators.

Renewable Energy Solutions

Capital Power Corporation develops and operates renewable energy projects, including wind, solar, and hydroelectric power.

Energy Storage

The company offers energy storage solutions to help stabilize the grid and provide backup power during outages.

Energy Management Services

Capital Power Corporation provides energy management services to help customers optimize their energy usage and reduce costs.

8. Capital Power Corporation's Porter Forces

Forces Ranking

Threat Of Substitutes

Capital Power Corporation operates in a highly regulated industry, which limits the threat of substitutes. However, the increasing adoption of renewable energy sources and energy storage technologies poses a moderate threat to the company's traditional business model.

Bargaining Power Of Customers

Capital Power Corporation's customers are largely residential and commercial consumers who have limited bargaining power. The company's diversified customer base and long-term contracts also reduce the bargaining power of customers.

Bargaining Power Of Suppliers

Capital Power Corporation relies on a few large suppliers for fuel and equipment. While the company has some bargaining power due to its scale, the suppliers' bargaining power is moderate due to the specialized nature of their products.

Threat Of New Entrants

The threat of new entrants is low due to the high barriers to entry in the power generation industry. The industry requires significant capital investment, regulatory approvals, and technical expertise, making it difficult for new entrants to compete with established players like Capital Power Corporation.

Intensity Of Rivalry

The power generation industry is highly competitive, with many established players competing for market share. Capital Power Corporation faces intense rivalry from other generators, which can lead to downward pressure on prices and margins.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 59.69%
Debt Cost 5.47%
Equity Weight 40.31%
Equity Cost 6.86%
WACC 6.03%
Leverage 148.06%

11. Quality Control: Capital Power Corporation passed 3 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
Kenon

A-Score: 7.5/10

Value: 3.1

Growth: 6.0

Quality: 6.0

Yield: 10.0

Momentum: 10.0

Volatility: 10.0

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AltaGas

A-Score: 6.9/10

Value: 4.9

Growth: 6.1

Quality: 3.6

Yield: 7.0

Momentum: 9.5

Volatility: 10.0

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Entergy

A-Score: 6.5/10

Value: 5.3

Growth: 3.4

Quality: 4.7

Yield: 7.0

Momentum: 8.5

Volatility: 10.0

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Capital Power

A-Score: 6.1/10

Value: 3.6

Growth: 6.3

Quality: 3.2

Yield: 9.0

Momentum: 7.0

Volatility: 7.3

1-Year Total Return ->

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Centrica

A-Score: 5.8/10

Value: 6.4

Growth: 5.4

Quality: 3.5

Yield: 3.1

Momentum: 8.5

Volatility: 8.0

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NRG Energy

A-Score: 5.6/10

Value: 4.1

Growth: 6.8

Quality: 4.6

Yield: 4.0

Momentum: 9.5

Volatility: 4.3

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

60.75$

Current Price

60.75$

Potential

-0.00%

Expected Cash-Flows