HLSE:FORTUM

Stock Analysis Report

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Executive Summary

Fortum Oyj, together with its subsidiaries, engages in the generation and sale of electricity and heat in the Nordic countries, Russia, Poland, India, other parts of the Baltic Rim area, and internationally. More Details

Rewards

Trading at 21.1% below our estimate of its fair value

Revenue is forecast to grow 6.99% per year

Earnings grew by 49.1% over the past year

Pays a high and reliable dividend of 6.14%

Risk Analysis

Earnings are forecast to decline by an average of 12.2% per year for the next 3 years

Debt is not well covered by operating cash flow

Large one-off items impacting financial results

Profit margins (9.6%) are lower than last year (21.7%)



Snowflake Analysis

6 star dividend payer and good value.


Similar Companies

Share Price & News

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


Latest Share Price and Events

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


Market Performance


7 Day Return

-0.7%

FORTUM

-0.8%

FI Electric Utilities

0.2%

FI Market


1 Year Return

-18.3%

FORTUM

13.7%

FI Electric Utilities

5.6%

FI Market

Return vs Industry: FORTUM underperformed the Finnish Electric Utilities industry which returned 14.1% over the past year.

Return vs Market: FORTUM underperformed the Finnish Market which returned 6.4% over the past year.


Shareholder returns

FORTUMIndustryMarket
7 Day-0.7%-0.8%0.2%
30 Day1.8%5.9%1.3%
90 Day-1.6%-0.2%9.8%
1 Year-12.2%-18.3%18.0%13.7%14.4%5.6%
3 Year18.9%-1.6%55.7%38.0%21.7%0.8%
5 Year85.9%30.0%68.5%32.0%63.6%28.6%

Price Volatility Vs. Market

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


Simply Wall St News

Valuation

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

21.1%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: FORTUM (€17.93) is trading below our estimate of fair value (€22.72)

Significantly Below Fair Value: FORTUM is trading below fair value by more than 20%.


Price To Earnings Ratio

PE vs Industry: FORTUM is good value based on its PE Ratio (9x) compared to the XE Electric Utilities industry average (11.8x).

PE vs Market: FORTUM is good value based on its PE Ratio (9x) compared to the Finnish market (23.9x).


Price to Earnings Growth Ratio

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


Price to Book Ratio

PB vs Industry: FORTUM is overvalued based on its PB Ratio (1.2x) compared to the XE Electric Utilities industry average (0.7x).


Next Steps

Future Growth

How is Fortum Oyj forecast to perform in the next 1 to 3 years based on estimates from 13 analysts?

-12.2%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: FORTUM's earnings are forecast to decline over the next 3 years (-12.2% per year).

Earnings vs Market: FORTUM's earnings are forecast to decline over the next 3 years (-12.2% per year).

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

Revenue vs Market: FORTUM's revenue (7% per year) is forecast to grow faster than the Finnish market (4.4% per year).

High Growth Revenue: FORTUM's revenue (7% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: FORTUM's Return on Equity is forecast to be low in 3 years time (7.4%).


Next Steps

Past Performance

How has Fortum Oyj performed over the past 5 years?

39.0%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: FORTUM has a large one-off gain of €552.0M impacting its June 30 2020 financial results.

Growing Profit Margin: FORTUM's current net profit margins (9.6%) are lower than last year (21.7%).


Past Earnings Growth Analysis

Earnings Trend: FORTUM's earnings have grown significantly by 39% per year over the past 5 years.

Accelerating Growth: FORTUM's earnings growth over the past year (49.1%) exceeds its 5-year average (39% per year).

Earnings vs Industry: FORTUM earnings growth over the past year (49.1%) exceeded the Electric Utilities industry -4.3%.


Return on Equity

High ROE: FORTUM's Return on Equity (11.4%) is considered low.


Next Steps

Financial Health

How is Fortum Oyj's financial position?


Financial Position Analysis

Short Term Liabilities: FORTUM's short term assets (€22.3B) exceed its short term liabilities (€19.1B).

Long Term Liabilities: FORTUM's short term assets (€22.3B) do not cover its long term liabilities (€22.6B).


Debt to Equity History and Analysis

Debt Level: FORTUM's debt to equity ratio (57.8%) is considered high.

Reducing Debt: FORTUM's debt to equity ratio has increased from 46.5% to 57.8% over the past 5 years.

Debt Coverage: FORTUM's debt is not well covered by operating cash flow (16.9%).

Interest Coverage: FORTUM's interest payments on its debt are well covered by EBIT (10.7x coverage).


Balance Sheet


Next Steps

Dividend

What is Fortum Oyj current dividend yield, its reliability and sustainability?

6.14%

Current Dividend Yield


Dividend Yield vs Market

Notable Dividend: FORTUM's dividend (6.14%) is higher than the bottom 25% of dividend payers in the Finnish market (1.93%).

High Dividend: FORTUM's dividend (6.14%) is in the top 25% of dividend payers in the Finnish market (4.54%)


Stability and Growth of Payments

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

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


Current Payout to Shareholders

Dividend Coverage: With its reasonable payout ratio (55%), FORTUM's dividend payments are covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: FORTUM's dividends in 3 years are forecast to be covered by earnings (76.2% payout ratio).


Next Steps

Management

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

8.5yrs

Average management tenure


CEO

Markus Heikki Rauramo (52 yo)

0.25

Tenure

Mr. Markus Heikki Erdem Rauramo, M.Sc. (Econ. and Pol. Hist.), has been Shareholder Representative Deputy Chairman of Supervisory Board since August 22, 2018 and as its Member of Supervisory Board since Ju ...


Leadership Team

NamePositionTenureCompensationOwnership
Markus Heikki Rauramo
President & CEO0.25yrno data0.0051%
€ 819.5k
Timo Karttinen
Acting Chief Financial Officer0.25yr€372.00kno data
Ensio Väisänen
Head of Corporate Financial Services Unit13.33yrsno datano data
Ingela Ulfves
Vice President of Investor Relations & Financial Communicationsno datano datano data
Sirpa-Helena Sormunen
Secretary to the Board & General Counsel6.08yrsno data0.0014%
€ 229.8k
Heli Kurki
Head of Publicity & Communicationsno datano datano data
Risto Penttinen
Senior Vice President of Strategy4.5yrsno data0.0021%
€ 335.8k
Per Langer
Executive Vice President of City Solutions11.75yrsno data0.0043%
€ 692.6k
Erkki Kari-Koskinen
Head of Marketsno datano datano data
Anders Egelrud
Managing Director of Fortum Värmeno datano datano data
Päivi Mecklin
Head of Customer Services Unit13.33yrsno datano data
Alexander Chuvaev
Executive Vice President of Russia Division11yrsno data0.0025%
€ 398.5k

8.5yrs

Average Tenure

54.5yo

Average Age

Experienced Management: FORTUM's management team is seasoned and experienced (8.5 years average tenure).


Board Members

NamePositionTenureCompensationOwnership
Teppo Paavola
Independent Director0.50yrno datano data
Matti Lievonen
Independent Chairman2.58yrsno data0.00017%
€ 27.3k
Anja McAlister
Independent Non-Executive Director3.5yrsno datano data
Klaus-Dieter Maubach
Independent Director2.75yrsno datano data
Veli-Matti Reinikkala
Independent Deputy Chairman0.50yrno data0.00034%
€ 54.6k
Essimari Kairisto
Independent Director2.58yrsno datano data
Eva Hamilton
Independent Non-Executive Director5.58yrsno data0%
€ 0
Philipp Rösler
Independent Director1.58yrsno datano data
Annette Stube
Independent Director0.50yrno datano data

2.6yrs

Average Tenure

58yo

Average Age

Experienced Board: FORTUM's board of directors are not considered experienced ( 2.6 years average tenure), which suggests a new board.


Ownership

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


Insider Trading Volume

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.


Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Top Shareholders

Company Information

Fortum Oyj's company bio, employee growth, exchange listings and data sources


Key Information

  • Name: Fortum Oyj
  • Ticker: FORTUM
  • Exchange: HLSE
  • Founded: 1998
  • Industry: Electric Utilities
  • Sector: Utilities
  • Market Cap: €16.069b
  • Shares outstanding: 888.29m
  • Website: https://www.fortum.com

Number of Employees


Location

  • Fortum Oyj
  • CD Building
  • Keilalahdentie 2-4
  • Espoo
  • Uusimaa
  • 2150
  • Finland

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
FOJC.FOTCPK (Pink Sheets LLC)YesRegistered SharesUSUSDDec 1998
FORTUMHLSE (OMX Nordic Exchange Helsinki)YesRegistered SharesFIEURDec 1998
0HAHLSE (London Stock Exchange)YesRegistered SharesGBEURDec 1998
FOTDB (Deutsche Boerse AG)YesRegistered SharesDEEURDec 1998
FOTXTRA (XETRA Trading Platform)YesRegistered SharesDEEURDec 1998
FORTMHBATS-CHIXE (BATS 'Chi-X Europe')YesRegistered SharesGBEURDec 1998
FOTETLX (Eurotlx)YesRegistered SharesITEURDec 1998
FOJC.YOTCPK (Pink Sheets LLC)ADRUSUSDOct 2008

Biography

Fortum Oyj, together with its subsidiaries, engages in the generation and sale of electricity and heat in the Nordic countries, Russia, Poland, India, other parts of the Baltic Rim area, and internationall ...


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2020/10/20 20:33
End of Day Share Price2020/10/20 00:00
Earnings2020/06/30
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.