Fortis (FTS) AI Stock Analysis

• Market Cap: $32.31B
• Dividend Yield: 5.18%
• Average Volume (3M): 1.79M
• Price to Earnings (P/E): 19.5
• Beta (1Y): 0.38
• Revenue Growth: 3.64%
• EPS Growth: 5.82%
• Country: CA
• Employees: 9,800
• Sector: Utilities
• Sector Strength: 77
• Industry: Regulated Electric
• EPS (TTM): 1.00
• Shares Outstanding: 501,600,000
• 10 Day Avg. Volume: 1,328,545
• 30 Day Avg. Volume: 1,790,455
• PEG Ratio: 2.86
• Price to Book (P/B): 1.23
• Price to Sales (P/S): 0.00
• P/FCF Ratio: -32.78
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $68.52
• Price Target Upside: 6.04% Upside
• Rating Consensus: Hold
• Number of Analyst Covering: 9

• Rating: 72 Outperform
• Price Target: C$76.00 ▲(17.61%Upside)

Fortis Inc. maintains a stable financial position with strong revenue growth and profitability. Positive earnings call sentiment and strategic financing bolster its long-term growth prospects. Technical indicators suggest current market weakness, and valuation metrics are moderately favorable.

Positive Factors

Financial Performance

Credit ratings from Moody’s and Dominion Bond Rating Service have been reaffirmed, indicating stable financial standing.

Growth Potential

FTS continues to steadily advance opportunities that could add upside to this base guidance, including MISO transmission and LNG infrastructure in B.C.

Market Confidence

FTS shares outperformed its large cap utility peers, indicating market confidence in Fortis's growth potential and favorable USD foreign exchange rates.

Negative Factors

EPS Growth Concerns

Fortis is seen to have below-average EPS growth, which is concerning given its current premium valuation.

Regulatory Risks

The appointment of Mark Christie as FERC Chairman introduces a risk for transmission ratemaking, impacting Fortis' risk profile.

Valuation Concerns

Fortis is trading at a 10% premium compared to its electric peer group, which is considered high given the current valuation.

Fortis Business Overview & Revenue Model

Company Description

Fortis Inc. (FTS) is a leading North American utility company headquartered in St. John's, Newfoundland and Labrador, Canada. The company operates in the regulated utilities sector, providing electricity and natural gas to customers across Canada, the United States, and the Caribbean. Fortis owns and operates a diversified portfolio of utility assets, including power generation facilities, transmission systems, and distribution networks, serving over three million customers.

How the Company Makes Money

Fortis Inc. generates revenue primarily through its regulated utility operations. The company's key revenue streams include the sale of electricity and natural gas to residential, commercial, and industrial customers. Since these operations are regulated by government entities, Fortis earns a stable and predictable income based on approved rates of return on its invested capital. Additionally, Fortis benefits from strategic acquisitions and investments in infrastructure projects that expand its service capabilities and customer base. The company's earnings are further supported by long-term power purchase agreements and regulatory mechanisms that allow for cost recovery and capital expenditure adjustments. Fortis maintains significant partnerships with regulatory bodies and industry stakeholders to ensure compliance and operational efficiency, which contribute to its overall financial performance.

Fortis Financial Statement Overview

Summary

Fortis demonstrates strong revenue growth and profitability, supported by robust operational efficiency. The balance sheet is stable with moderate leverage, typical for the industry. While cash flow from operations remains strong, negative free cash flow warrants attention. Overall, Fortis is financially healthy with a focus on maintaining growth and profitability, while managing its debt levels and improving free cash flow.

Income Statement

Fortis has shown consistent revenue growth, with a growth rate of 1.91% in TTM, indicating stable expansion. The gross profit margin is strong at 61.63%, reflecting effective cost management. The net profit margin stands at 14.69%, showing solid profitability. EBIT and EBITDA margins of 28.72% and 47.77%, respectively, highlight robust operational efficiency. Overall, the income statement reflects healthy profitability and steady growth.

Balance Sheet

The company's balance sheet shows a stable equity base with an equity ratio of 32.30%, indicating a moderate level of leverage. The debt-to-equity ratio of 1.43 suggests reliance on debt financing, which is typical for the industry but poses potential risks in a rising interest rate environment. Return on equity is a healthy 7.14%, demonstrating effective use of shareholder funds. Overall, the balance sheet is solid with manageable leverage levels.

Cash Flow

Fortis has experienced a slight decline in free cash flow growth, from -1336 million to -1269 million, indicating improving but still negative free cash flow. The operating cash flow to net income ratio of 2.51 shows strong cash generation relative to income. The negative free cash flow may raise concerns if it continues long-term, but current cash flow coverage of net income is reassuring. Overall, cash flow management is adequate but requires monitoring.

Breakdown
TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
9.21B	11.51B	11.52B	11.04B	9.45B	8.94B
	Gross Profit
6.42B	8.26B	4.86B	7.09B	6.50B	6.37B
	EBIT
2.47B	3.29B	3.08B	2.74B	2.47B	2.51B
	EBITDA
3.99B	5.51B	5.15B	4.50B	4.02B	3.97B
	Net Income Common Stockholders
1.30B	1.68B	1.57B	1.39B	1.29B	1.27B
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
220.00M	220.00M	625.00M	209.00M	131.00M	249.00M
	Total Assets
73.49B	73.49B	65.92B	64.25B	57.66B	55.48B
	Total Debt
33.70B	33.70B	30.03B	29.04B	25.95B	24.86B
	Net Debt
33.48B	33.48B	29.40B	28.83B	25.82B	24.61B
	Total Liabilities
47.63B	47.63B	42.59B	41.41B	36.74B	35.20B
	Stockholders Equity
23.81B	23.81B	21.50B	21.03B	19.29B	18.70B
Cash Flow		Free Cash Flow
-763.00M	-1.34B	-624.00M	-791.00M	-479.00M	-1.34B
	Operating Cash Flow
2.89B	3.88B	3.54B	3.07B	2.91B	2.70B
	Investing Cash Flow
-3.74B	-5.39B	-3.74B	-4.06B	-3.49B	-4.13B
	Financing Cash Flow
585.00M	1.06B	613.00M	1.03B	451.00M	1.33B

Fortis Technical Analysis

• Technical Analysis Sentiment: Neutral
• Last Price: 64.62
• 50DMA: Negative
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:FTS, the sentiment is Neutral. The current price of 64.62 is below the 20-day moving average (MA) of 65.58, below the 50-day MA of 65.87, and above the 200-day MA of 61.93, indicating a neutral trend. The MACD of -0.37 indicates Positive momentum. The RSI at 42.20 is Neutral, neither overbought nor oversold. The STOCH value of 25.19 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for TSE:FTS.

Fortis Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
CPX	75 Outperform	C$8.72B	12.15	15.24%	4.64%	-27.55%	-12.05%
FTS	72 Outperform	$32.31B	19.48	7.46%	5.18%	3.64%	5.82%
EMA	72 Outperform	C$18.15B	20.69	7.12%	6.46%	8.17%	31.60%
CU	72 Outperform	C$7.75B	25.83	6.76%	4.86%	-0.53%	-31.77%
H	68 Neutral	C$29.21B	23.95	10.15%	3.73%	9.95%	11.34%
Sector *	64 Neutral	$8.52B	10.34	4.25%	5.88%	4.06%	-12.76%
BEP.UN	55 Neutral	$23.06B	―	-5.97%	5.87%	22.01%	-183.73%

Fortis Corporate Events

Fortis Inc. Announces Preference Share Conversion Results

Fortis Inc. announced the results of its Series H and Series I preference share conversions. A total of 11,298 Series H Shares were converted into Series I Shares, and 248,830 Series I Shares were converted into Series H Shares. Following these conversions, Fortis has 7,902,614 Series H Shares and 2,097,386 Series I Shares outstanding. The Series H Shares will offer a fixed dividend rate of 4.183 percent, while the Series I Shares will provide a floating dividend rate initially set at 4.103 percent, adjusted quarterly. These changes reflect Fortis’s ongoing financial strategies and may impact investor decisions regarding dividend returns.

The most recent analyst rating on (TSE:FTS) stock is a Hold with a C$59.00 price target. To see the full list of analyst forecasts on Fortis stock, see the TSE:FTS Stock Forecast page.

Fortis Inc. Completes $600 Million Senior Notes Offering

Fortis Inc. has successfully closed a private placement offering of $600 million in senior unsecured notes, maturing in 2032, with a 4.090% interest rate. This strategic financial move, facilitated by a syndicate of agents, bolsters Fortis’ capital structure and supports its ongoing operations and growth in the utility sector, reinforcing its position as a key player in the North American energy market.