Fortis (FTS) AI Stock Analysis

• Market Cap: $33.00B
• Dividend Yield: 3.65%
• Average Volume (3M): 1.78M
• Price to Earnings (P/E): 20.3
• Beta (1Y): 0.40
• Revenue Growth: -0.08%
• EPS Growth: 4.76%
• Country: CA
• Employees: 9,848
• Sector: Utilities
• Sector Strength: 85
• Industry: Regulated Electric
• EPS (TTM): 3.24
• Shares Outstanding: 501,594,540
• 10 Day Avg. Volume: 1,860,780
• 30 Day Avg. Volume: 1,775,438
• PEG Ratio: 4.26
• Price to Book (P/B): N/A
• Price to Sales (P/S): 2.82
• Price to Cash Flow (P/CF): 6.00
• P/FCF Ratio: 212.00
• 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: C$65.25
• Price Target Upside: -1.34% Downside
• Rating Consensus: Moderate Sell
• Number of Analyst Covering: 10

Fortis's stock score reflects its solid financial performance and strategic initiatives, supported by consistent dividend growth and robust capital investments. The company's stable operating performance and effective management of leverage are key strengths, while challenges include high capital expenditures affecting free cash flow and potential regulatory hurdles. Valuation concerns persist with a relatively high P/E ratio, tempered by a strong dividend yield. Overall, Fortis maintains a positive outlook with a stable growth trajectory.

Positive Factors

Asset Base Quality

Investors are likely to have a positive bias toward Fortis's nearly 99% regulated assets, offering visible growth despite U.S. trade war uncertainty.

Management Plan

Fortis management's plan is considered highly achievable, which could be a positive factor for the company's future performance.

Regulatory Environment

The outlook for Fortis' Arizona utilities is improving, with potential for additional generation spending and favorable regulatory reforms.

Negative Factors

Earnings Growth

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

Incentive Risks

Concerns exist that previously available transmission incentives may become harder to secure, affecting transmission project risks.

Regulatory Risk

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

Fortis Business Overview & Revenue Model

Company Description

Fortis Inc. operates as an electric and gas utility company in Canada, the United States, and the Caribbean countries. It generates, transmits, and distributes electricity to approximately 438,000 retail customers in southeastern Arizona; and 100,000 retail customers in Arizona's Mohave and Santa Cruz counties with an aggregate capacity of 3,485 megawatts (MW), including 53 MW of solar capacity and 252 MV of wind capacity. The company also sells wholesale electricity to other entities in the western United States; owns gas-fired and hydroelectric generating capacity totaling 65 MW; and distributes natural gas to approximately 1,065,000 residential, commercial, and industrial customers in British Columbia, Canada. In addition, it owns and operates the electricity distribution system that serves approximately 577,000 customers in southern and central Alberta; owns 4 hydroelectric generating facilities with a combined capacity of 225 MW; and provides operation, maintenance, and management services to five hydroelectric generating facilities. Further, the company distributes electricity in the island portion of Newfoundland and Labrador with an installed generating capacity of 143 MW; and on Prince Edward Island with a generating capacity of 130 MW. Additionally, it provides integrated electric utility service to approximately 68,000 customers in Ontario; approximately 272,000 customers in Newfoundland and Labrador; approximately 32,000 customers on Grand Cayman, Cayman Islands; and approximately 16,000 customers on certain islands in Turks and Caicos. The company also holds long-term contracted generation assets in Belize consisting of 3 hydroelectric generating facilities with a combined capacity of 51 MW; and the Aitken Creek natural gas storage facility. It also owns and operates approximately 90,200 circuit Kilometers (km) of distribution lines; and approximately 50,500 km of natural gas pipelines. Fortis Inc. was founded in 1885 and is headquartered in St. John's, Canada.

How the Company Makes Money

Fortis makes money through its regulated utility operations, which provide electric and gas services to millions of customers. The company's revenue model is heavily reliant on regulated utility rates, which are approved by government regulatory bodies and provide a stable and predictable income stream. Key revenue streams include electricity generation and distribution, natural gas distribution, and transmission operations. Fortis also benefits from strategic acquisitions and investments in renewable energy projects, which contribute to its earnings. Additionally, the company may engage in partnerships with other utility providers or energy companies to enhance its service offerings and expand its market presence.

Fortis Financial Statement Overview

Summary

Fortis demonstrates strong profitability with robust EBIT and EBITDA margins. Despite a high debt-to-equity ratio, the company maintains a stable balance sheet and efficient cash generation from operations. However, significant capital expenditures impact free cash flow, reflecting challenges typical of the utilities sector.

Income Statement

Fortis exhibits strong profitability with a consistent increase in net income over recent years. The gross profit margin for 2024 is approximately 71.8%, and the net profit margin is about 14.6%, highlighting effective cost management and operational efficiency. Revenue growth has been moderate, with a recent slight decline, but overall, the company maintains a stable financial performance. EBIT and EBITDA margins are robust at 28.6% and 47.9%, respectively, indicating solid operating health.

Balance Sheet

Fortis has a relatively high debt-to-equity ratio of 1.42, suggesting leverage is significant, but manageable given the industry context. The equity ratio stands at 32.4%, indicating a strong capital base. Return on equity is healthy at 7.1%, reflecting good returns for shareholders despite high debt levels. Overall, the company maintains a stable balance sheet with adequate equity backing its assets.

Cash Flow

The cash flow statement shows some challenges, particularly with free cash flow being negative at -$1.336 billion, indicating high capital expenditures typical of the utilities sector. Operating cash flow is strong relative to net income, with a ratio of 2.31, suggesting efficient cash generation from operations. However, the free cash flow to net income ratio is negative, underscoring the impact of capital spending.

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

Fortis Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 66.14
• 50DMA: Positive
• 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 Positive. The current price of 66.14 is above the 20-day moving average (MA) of 64.73, above the 50-day MA of 63.72, and above the 200-day MA of 59.98, indicating a bullish trend. The MACD of 0.35 indicates Positive momentum. The RSI at 59.99 is Neutral, neither overbought nor oversold. The STOCH value of 67.80 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for TSE:FTS.

Fortis Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
FTS	73 Outperform	$33.00B	20.29	7.47%	3.65%	-0.08%	4.76%
CU	70 Neutral	C$7.46B	24.50	6.93%	4.99%	-1.42%	-36.31%
Sector *	63 Neutral	$9.19B	11.97	6.86%	4.40%	4.23%	-11.24%

Fortis Corporate Events

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.

Fortis Inc. Files 2024 Year-End Financial Disclosure Documents

Fortis Inc. has filed its audited Consolidated Financial Statements, Management Discussion and Analysis, Form 40-F, and 2024 Annual Information Form with Canadian and U.S. securities regulatory authorities for the year ending December 31, 2024. This filing supports transparency and compliance, potentially impacting investor relations as documents are made available electronically for stakeholders. The Management Information Circular for the upcoming Annual Meeting of Shareholders is expected by late March.

Fortis Inc. Reports Strong 2024 Financial Results with Continued Dividend Growth

Fortis Inc. reported strong financial results for 2024, with annual net earnings reaching $1.6 billion, marking a 6% growth in adjusted net earnings per share. The company’s robust performance was driven by rate base growth and strategic capital expenditures totaling $5.2 billion. Despite some challenges, such as increased finance costs and unrealized losses on derivatives, Fortis maintained a steady increase in its common share dividend for the 51st consecutive year. The company remains committed to its $26 billion five-year capital plan, aiming to achieve annual dividend growth of 4-6% through 2029, thereby reinforcing its industry position and delivering value to stakeholders.

Fortis Inc. Declares Second Quarter 2025 Dividends

Fortis Inc. has announced dividends for the second quarter of 2025, declaring specific per-share dividends for various series of its First Preference Shares as well as its Common Shares, all payable on June 1, 2025, to shareholders of record by May 16, 2025. This announcement underscores Fortis’s commitment to providing returns to its shareholders and highlights its ongoing role as a stable entity in the utility industry, offering eligible dividends that benefit from federal and provincial tax credits.