Stock of the Day

November 6, 2019

Fortis (FTS)

$58.80
+$0.13 (+0.2%)
Market Cap: $29.97B

About Fortis

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 447,000 retail customers in southeastern Arizona; and 103,000 retail customers in Arizona's Mohave and Santa Cruz counties with an aggregate capacity of 3,408 megawatts (MW), including 68 MW of solar capacity and 250 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 1,087,000 residential, commercial, and industrial customers in British Columbia, Canada. In addition, it owns and operates the electricity distribution system that serves approximately 592,000 customers in southern and central Alberta; owns four 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 145 MW; and on Prince Edward Island with a generating capacity of 90 MW. Additionally, it provides integrated electric utility service to approximately 69,000 customers in Ontario; approximately 275,000 customers in Newfoundland and Labrador; approximately 34,000 customers on Grand Cayman, Cayman Islands; and approximately 17,000 customers on certain islands in Turks and Caicos. It 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 90,500 circuit Kilometers (km) of distribution lines; and approximately 51,600 km of natural gas pipelines. Fortis Inc. was founded in 1885 and is headquartered in St. John's, Canada.

Fortis Bull Case

Here are some ways that investors could benefit from investing in Fortis Inc.:

  • Fortis Inc. recently reported earnings per share (EPS) of $0.72, exceeding analysts' expectations, which indicates strong financial performance and potential for future growth.
  • The company has a solid net margin of over 14%, suggesting effective cost management and profitability, which can be attractive to investors looking for stable returns.
  • Fortis Inc. has received multiple "buy" ratings from analysts, reflecting positive sentiment and confidence in the company's future performance.
  • The current stock price is around $61, which aligns with the consensus target price set by analysts, indicating that it may be a good entry point for new investors.
  • With a projected EPS of 2.62 for the current fiscal year, Fortis Inc. shows potential for continued earnings growth, which can lead to increased shareholder value.

Fortis Bear Case

Investors should be bearish about investing in Fortis Inc. for these reasons:

  • The company's revenue for the latest quarter was $2.45 billion, falling short of the consensus estimate, which may raise concerns about its ability to meet future growth targets.
  • Fortis Inc. experienced a decline in EPS compared to the same quarter last year, which could indicate challenges in maintaining profitability.
  • Analysts have recently adjusted their target price downward, which may signal a lack of confidence in the stock's short-term performance.
  • Despite a strong net margin, the return on equity of 7.25% may be considered low compared to industry standards, suggesting that the company may not be utilizing its equity effectively.
  • With a mix of "buy" and "hold" ratings from analysts, there is uncertainty in the market regarding the stock's potential, which could deter risk-averse investors.
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