TSX:FTS

Stock Analysis Report

Executive Summary

Fortis Inc. operates as an electric and gas utility company in Canada, the United States, and the Caribbean countries.

Rewards

Trading at 6.9% below its fair value

Revenue is forecast to grow 6.07% per year

Earnings grew by 50.5% over the past year

Pays a high and reliable dividend of 3.74%

Risk Analysis

Earnings are forecast to decline by an average of -4.7% per year for the next 3 years

Interest payments are not well covered by earnings

Large one-off items impacting financial results

Shareholders have been diluted in the past year



Snowflake Analysis

Established dividend payer with proven track record.


Similar Companies

Share Price & News

How has Fortis's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: FTS has not had significant price volatility in the past 3 months.


Market Performance


7 Day Return

2.8%

FTS

-4.6%

CA Electric Utilities

3.0%

CA Market


1 Year Return

2.4%

FTS

-7.2%

CA Electric Utilities

-24.5%

CA Market

Return vs Industry: FTS exceeded the Canadian Electric Utilities industry which returned -7.2% over the past year.

Return vs Market: FTS exceeded the Canadian Market which returned -24.5% over the past year.


Shareholder returns

FTSIndustryMarket
7 Day2.8%-4.6%3.0%
30 Day-12.3%-22.3%-21.2%
90 Day-5.4%-16.1%-24.4%
1 Year6.0%2.4%-4.2%-7.2%-22.0%-24.5%
3 Year29.4%15.9%14.9%3.8%-13.9%-21.9%
5 Year55.8%29.3%42.8%19.0%-2.0%-16.6%

Price Volatility Vs. Market

How volatile is Fortis's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is Fortis undervalued compared to its fair value and its price relative to the market?

6.9%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: FTS (CA$51.08) is trading below our estimate of fair value (CA$54.89)

Significantly Below Fair Value: FTS is trading below fair value, but not by a significant amount.


Price To Earnings Ratio

PE vs Industry: FTS is good value based on its PE Ratio (13.5x) compared to the Electric Utilities industry average (18.8x).

PE vs Market: FTS is poor value based on its PE Ratio (13.5x) compared to the Canadian market (10.6x).


Price to Earnings Growth Ratio

PEG Ratio: FTS's earnings are forecast to decline next year, so we can't calculate its PEG ratio.


Price to Book Ratio

PB vs Industry: FTS is good value based on its PB Ratio (1.4x) compared to the XN Electric Utilities industry average (1.7x).


Next Steps

Future Growth

How is Fortis forecast to perform in the next 1 to 3 years based on estimates from 12 analysts?

-4.7%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: FTS's earnings are forecast to decline over the next 3 years (-4.7% per year).

Earnings vs Market: FTS's earnings are forecast to decline over the next 3 years (-4.7% per year).

High Growth Earnings: FTS's earnings are forecast to decline over the next 3 years.

Revenue vs Market: FTS's revenue (6.1% per year) is forecast to grow faster than the Canadian market (3.4% per year).

High Growth Revenue: FTS's revenue (6.1% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: FTS's Return on Equity is forecast to be low in 3 years time (8%).


Next Steps

Past Performance

How has Fortis performed over the past 5 years?

25.1%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: FTS has a large one-off gain of CA$588.0M impacting its December 31 2019 financial results.

Growing Profit Margin: FTS's current net profit margins (18.8%) are higher than last year (13.1%).


Past Earnings Growth Analysis

Earnings Trend: FTS's earnings have grown significantly by 25.1% per year over the past 5 years.

Accelerating Growth: FTS's earnings growth over the past year (50.5%) exceeds its 5-year average (25.1% per year).

Earnings vs Industry: FTS earnings growth over the past year (50.5%) exceeded the Electric Utilities industry 7.3%.


Return on Equity

High ROE: FTS's Return on Equity (9.2%) is considered low.


Next Steps

Financial Health

How is Fortis's financial position?


Financial Position Analysis

Short Term Liabilities: FTS's short term assets (CA$2.6B) do not cover its short term liabilities (CA$4.2B).

Long Term Liabilities: FTS's short term assets (CA$2.6B) do not cover its long term liabilities (CA$29.1B).


Debt to Equity History and Analysis

Debt Level: FTS's debt to equity ratio (112.9%) is considered high.

Reducing Debt: FTS's debt to equity ratio has reduced from 118.8% to 112.9% over the past 5 years.

Debt Coverage: FTS's debt is not well covered by operating cash flow (11.7%).

Interest Coverage: FTS's interest payments on its debt are not well covered by EBIT (2.3x coverage).


Balance Sheet

Inventory Level: FTS has a high level of physical assets or inventory.

Debt Coverage by Assets: FTS's debt is not covered by short term assets (assets are 0.1x debt).


Next Steps

Dividend

What is Fortis's current dividend yield, its reliability and sustainability?

3.74%

Current Dividend Yield


Upcoming Dividend Payment


Dividend Yield vs Market

Notable Dividend: FTS's dividend (3.74%) is higher than the bottom 25% of dividend payers in the Canadian market (2.69%).

High Dividend: FTS's dividend (3.74%) is low compared to the top 25% of dividend payers in the Canadian market (8.7%).


Stability and Growth of Payments

Stable Dividend: FTS's dividends per share have been stable in the past 10 years.

Growing Dividend: FTS's dividend payments have increased over the past 10 years.


Current Payout to Shareholders

Dividend Coverage: With its reasonably low payout ratio (48.2%), FTS's dividend payments are well covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: FTS's dividends in 3 years are forecast to be covered by earnings (71.9% payout ratio).


Next Steps

Management

How experienced are the management team and are they aligned to shareholders interests?

2.0yrs

Average management tenure


CEO

Barry Perry (54yo)

5.25s

Tenure

CA$9,080,480

Compensation

Mr. Barry V. Perry became a Director of ITC Holdings Corp. in October 2016. Mr. Perry serves as Chief Executive Officer of Fortis Inc. since January 2015 and serves as its President since June 30, 2014. Mr ...


CEO Compensation Analysis

Compensation vs Market: Barry's total compensation ($USD6.43M) is about average for companies of similar size in the Canadian market ($USD6.63M).

Compensation vs Earnings: Barry's compensation has been consistent with company performance over the past year.


Leadership Team

NamePositionTenureCompensationOwnership
Barry Perry
President5.25yrsCA$9.08m0.069% CA$16.4m
Jocelyn Perry
Executive VP & CFO1.83yrsCA$1.94m0.0089% CA$2.1m
David Hutchens
Chief Operating Officer0.25yrCA$6.74m0.011% CA$2.6m
James Laurito
Executive VP of Business Development & CTO0.92yrCA$3.28m0.010% CA$2.5m
Nora Duke
Executive VP of Sustainability & Chief Human Resource Officer4.67yrsCA$2.37m0.024% CA$5.6m
Ronald Hinsley
Chief Information Officer & VPno datano data0.00022% CA$52.1k
Stephanie Amaimo
Vice President of Investor Relations2.5yrsno data0.00093% CA$220.2k
James Reid
Executive VP2.08yrsno data0.0026% CA$625.0k
Karen McCarthy
Vice President of Communications & Corporate Affairs1.92yrsno data0.00034% CA$80.5k
Regan O'Dea
VP & Corporate General Counselno datano data0.0010% CA$248.6k

2.0yrs

Average Tenure

55.5yo

Average Age

Experienced Management: FTS's management team is considered experienced (2 years average tenure).


Board Members

NamePositionTenureCompensationOwnership
Barry Perry
President5.25yrsCA$9.08m0.069% CA$16.4m
J. F. Hew
CEO, Presidentno datano datano data
Maura Clark
Independent Corporate Director4.92yrsCA$263.60k0.00043% CA$101.8k
Paul Bonavia
Independent Corporate Director1.92yrsCA$148.62kno data
Jo Zurel
Independent Corporate Director3.92yrsCA$243.59k0.0022% CA$511.4k
Pierre Blouin
Independent Corporate Director4.92yrsCA$240.01k0.00051% CA$120.7k
Douglas Haughey
Independent Chairman of the Board3.58yrsCA$452.10k0.0022% CA$511.4k
Tracey Ball
Independent Corporate Director5.92yrsCA$341.47k0.0011% CA$253.3k
Margarita Dilley
Independent Corporate Director3.92yrsCA$369.22kno data
Lawrence Borgard
Independent Corporate Director2.92yrsCA$253.63k0.0011% CA$267.5k

3.9yrs

Average Tenure

60.5yo

Average Age

Experienced Board: FTS's board of directors are considered experienced (3.9 years average tenure).


Ownership

Who are the major shareholders and have insiders been buying or selling?


Insider Trading Volume

Insider Buying: FTS insiders have bought more shares than they have sold in the past 3 months.


Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have been diluted in the past year, with total shares outstanding growing by 2.8%.


Top Shareholders

Company Information

Fortis Inc.'s company bio, employee growth, exchange listings and data sources


Key Information

  • Name: Fortis Inc.
  • Ticker: FTS
  • Exchange: TSX
  • Founded: 1885
  • Industry: Electric Utilities
  • Sector: Utilities
  • Market Cap: CA$23.676b
  • Shares outstanding: 463.51m
  • Website: https://www.fortisinc.com

Number of Employees


Location

  • Fortis Inc.
  • Fortis Place
  • Suite 1100
  • St. John's
  • Newfoundland and Labrador
  • A1B 3T2
  • Canada

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
FTSTSX (The Toronto Stock Exchange)YesCommon SharesCACADDec 1987
12FDB (Deutsche Boerse AG)YesCommon SharesDEEURDec 1987
FTSNYSE (New York Stock Exchange)YesCommon SharesUSUSDDec 1987
FTS.PRFTSX (The Toronto Stock Exchange)1ST PFD SER FCACADSep 2006
FORF.FOTCPK (Pink Sheets LLC)1ST PFD SER FUSCADSep 2006
FTS.PRHTSX (The Toronto Stock Exchange)PREF SHS SER HCACADJan 2010
FTS.PRJTSX (The Toronto Stock Exchange)1ST PF SHS S JCACADNov 2012
FTS.PRMTSX (The Toronto Stock Exchange)1ST PREF SER MCACADSep 2014
FTS.PRITSX (The Toronto Stock Exchange)PREF SHS SER ICACADJun 2015

Biography

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 429,000 retail customers in southeastern Arizona; and 97,000 retail customers in Arizona’s Mohave and Santa Cruz counties with an aggregate capacity of 3,143 megawatts (MW), including 59 MW of solar 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 1,041,000 residential, commercial and industrial and transportation customers in British Columbia, Canada. In addition, it owns and operates the electricity distribution system that serves approximately 568,000 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 140 MW. Additionally, it provides integrated electric utility service to approximately 66,000 customers in Ontario; approximately 269,000 customers in Newfoundland and Labrador; approximately 31,000 customers on Grand Cayman, Cayman Islands; and approximately 15,000 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 91,000 circuit Kilometers (km) of distribution lines; and approximately 49,500 km of natural gas pipelines. Fortis Inc. was founded in 1885 and is headquartered in St. John's, Canada. 


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2020/04/04 03:31
End of Day Share Price2020/04/03 00:00
Earnings2019/12/31
Annual Earnings2019/12/31


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.