* Note: Prices are in Million (M) USD.
Description:
Fortis Inc. is a leading utility company based in St. John's, Newfoundland and Labrador, with a diversified portfolio of regulated gas and electric utilities across Canada, the United States, and the Caribbean, serving approximately 3.4 million customers. Committed to sustainable energy solutions, Fortis employs a disciplined capital investment strategy that focuses on enhancing energy delivery and driving the transition to a low-carbon future. The company's strong dividend policy not only attracts income-oriented investors but also underscores its dedication to positively impacting the communities in which it operates. Fortis continues to position itself as a reliable player in the utility sector, with an eye toward long-term growth and sustainability.
These criteria used Company's Cash, EBITDA and Debt balance to determines its fair value:
Cash : $389 M
Debt : $34,070 M
EBITDA : $5,441 M
Net Debt (Debt - Cash): $33,681 M
Since EBITDA cannot cover net debt within 3 years, Avoid This Stock.
This criteria used industry in which company operates:
Sector: Energy & transportation
Industry: Electric services
Based on industry, 3 points assigned.
This criteria used Company's Price To Earning (P/E) Ratio to determines its fair value:
Forward PE Ratio: 20.53
Since Forward PE Ratio is between 20 - 25, 2 points assigned.
This criteria used Company's ability to convert Sales into free cash flow to determine fair value:
Using last 20 overlapping fiscal years (max 20).Average Free Cash Flow: $-527 M
Average Revenue: $6,260 M
Revenue Converted To Free Cash Flow (%): -8.4%
Since Free Cash Flow (FCF) to Revenue percentage is non-positive, 0 point assigned.
This criteria used company's growth potential to calculate its fair value:
Latest Revenue (2024-12-31): $11,508 M
Revenue 5 Years Ago (2019-12-31): $8,783 M
Total Growth over 5 Years: 31.0%
5-Year Revenue CAGR (Historical): 5.6%
Forward 5-Year CAGR (Tapered): 5.0%
Since historical Revenue CAGR is between 5 - 10, 2 points assigned.
This criteria used Company's ability to buy back its own share:
Latest Share Count (2024-12-31): $495 M
Share Count 5 Years Ago (2020-12-31): $455 M
Company is not buying back its own shares, 0 points assigned.
This criteria used Company's dividend payout ratio to determine its fair value:
Next Year Earnings Per Share (EPS): $2.55
Trailing 12-Month Earnings Per Share (EPS): $2.47
Average Earnings Per Share (EPS): $2.51
Dividend Per Share (DPS): $2
Payout Ratio: 98%
Dividend Yield: 4.74%
⚠️ Caution: Further research is recommended — dividend payout ratio is too high (98%).
Since company Payout Ratio is greater than 50, 1 point assigned.
Since Dividend Yield is greater than 4, 4 points assigned.
This criteria used Company's Return On Equity (ROE%) to determine its fair value:
Using last 20 valid ROE years (max 20).Average ROE: 7.4%
Since Average ROE is less than 10, 1 point assigned.
This criteria used Company's current price to its 52 week low price to determines its fair value:
Current Price: $51.61
52-Week Low: $38.87
Threshold Price (15% Above 52-Week Low): $44.70
Since Current price is not within 15% threshold, 0 point assigned.
This criteria used Company's Market Cap to determines its fair value:
Market Capitalization: $26,498 M
Since Market Cap is between 10B - 100B, 2 points assigned.
% Exposure to Total Portfolio
Based on the market cap, we recommend do not exceed 3% exposure of Total Portfolio.
Warren Buffett's Owners' Earnings:
No positive free cash flow found (TTM or annual) to compute Owners' Earnings per share.
Note: Many fast-growing companies reinvest heavily, so Owners' Earnings may appear low.
Consider other factors in your valuation.
Value-Trade has assigned 15 points to above Fortis Inc (FTS) stock.
Last 9 Years Avg PE
12.34, Fair Value PE
12, Industry Based PE
13, Growth Based PE
15, ROE Based PE
7.36, Risk-Free Anchored PE (25% MoS)
18.34. Based on these 6 values, average assigned is
13.01. Value-Trades has assined P/E value
13.01. An average (Current Year EPS + Next Year EPS) earning per share is
$2.5139.
Fair value using multiple P/Es (blended): $32.70 (PE 13.01 × EPS $2.51)
So the Final Fair Value is: $32.70
Understanding the Value-Trades P/E Blend (click to expand)
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What goes into the blended P/E?
- 20-Year Avg P/E — Long-run market baseline; conservative anchor.
- Fair Value P/E — Score-based (cash, debt, sector, etc.).
- Industry P/E — Peer group norm.
- Growth-Based P/E — Uses tapered growth rates, floored at 15.
- RCFC-Based P/E — Maps cash conversion efficiency.
- ROE-Based P/E — Higher ROE supports higher multiples.
- Risk-Free Anchored P/E — Macro floor tied to 10y yield w/ MoS.
How it works
- Extreme values are clamped/filtered (IQR method).
- Anchors (20y avg, RCFC/ROE, risk-free) are always kept if valid.
- Final fair value = min(Blended PE × EPS, Avg PE × EPS).
P/E Reference Summary
Using EPS: $2.51
| Source |
P/E Ratio |
Implied Fair Value |
| Market (1 Yr Ago) | 14.36 | $36.10 |
| 9 Yrs Avg-PE | 12.34 | $31.02 |
| Value-Trades Assigned | 13.01 | $32.71 |
Note: Only 9 years of reliable P/E data available. Fair value is calculated using blended models to reduce bias.
