Fortis Inc. (FTS) is listed on NYSE and operates in the Regulated Electric industry (Utilities sector).
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 Island...
| Rating | Analysts |
|---|---|
| Strong Buy | 0 |
| Buy | 4 |
| Hold | 8 |
| Sell | 1 |
| Strong Sell | 0 |
Fortis Inc. is a utility company headquartered in St. John's, Canada, operating in the electric and gas sectors across Canada, the United States, and the Caribbean. The company provides electricity generation, transmission, and distribution services. In Arizona, it serves approximately 538,000 retail customers with a total capacity of 3,485 megawatts, including solar and wind energy. Fortis also engages in wholesale electricity sales in the western United States and owns gas-fired and hydroelectric generating facilities with a combined capacity of 65 megawatts. In Canada, the company distributes natural gas to about 1,065,000 customers in British Columbia and operates an electricity distribution system for 577,000 customers in Alberta. It manages hydroelectric facilities with a total capacity of 225 megawatts and provides services to additional facilities. In Newfoundland and Labrador, Fortis has a generating capacity of 143 megawatts, while on Prince Edward Island, it has 130 megawatts. The company also serves customers in Ontario, the Cayman Islands, and Turks and Caicos. Fortis owns long-term contracted generation assets in Belize and operates the Aitken Creek natural gas storage facility. It manages approximately 90,200 km of distribution lines and 50,500 km of natural gas pipelines. Founded in 1885, Fortis continues to expand its utility services.
Over the past three fiscal years, the company has demonstrated a mixed performance across various financial metrics. Revenue showed an inconsistent trend, growing at a modest CAGR of 2.8% from CAD 11.52 billion in 2023 to CAD 12.17 billion in 2025. Despite this, the company achieved consistent improvements in profitability, with gross margin expanding by 5.0pp to 72.3%, and operating margin increasing by 1.9pp to 28.7%. Net margin also saw a rise of 1.1pp, reaching 14.8%, indicating effective cost management and operational efficiency. However, cash flow generation has been a challenge, as free cash flow (FCF) consistently decreased, with the FCF margin deteriorating by 12.4pp to -17.8%, reflecting higher capital expenditures and possibly increased working capital needs. The company's net debt position increased at a CAGR of 7.9%, reaching CAD 34.26 billion, which, coupled with a net debt to EBITDA ratio of 5.8x, suggests a significant leverage level. Additionally, the share count increased by 8.8%, leading to dilution that partially offset per-share earnings growth. Liquidity remains a concern, with both the current and quick ratios below 1, and interest coverage is thin at 2.6x, indicating potential challenges in meeting short-term obligations. Despite these challenges, the company has maintained a stable return on invested capital (ROIC) of 5.5%, suggesting that it is still generating value from its investments.
Fortis Inc. recently reported its first quarter 2026 financial results, revealing net earnings attributable to common equity shareholders of $501 million, consistent with the previous year's first quarter. The earnings per share were reported at $5.99, with capital expenditures amounting to $1 billion. These results were discussed in a teleconference and webcast on May 6, 2026, led by CEO David Hutchens and CFO Jocelyn Perry. In related developments, Fortis shareholders approved the election of directors and the appointment of Deloitte LLP as auditors during the annual meeting held on May 7, 2026. Analyst sentiment towards Fortis remains positive, with BMO Capital Markets and Canadian Imperial Bank of Commerce raising their target prices to C$74 and C$75, respectively, following the stock reaching a new 12-month high of C$80 in April. These financial and strategic updates underscore Fortis's stable performance and continued investor confidence in its growth trajectory.
The utility industry, where Fortis Inc. operates, is currently experiencing significant transformation driven by macro trends such as the transition to cleaner energy sources, regulatory changes, and technological advancements. Fortis is navigating a landscape shaped by the need for increased infrastructure resilience and energy efficiency. Management identifies key tailwinds including strong regulatory support for infrastructure investments and the growing demand for energy, particularly from large data centers. However, they also face headwinds such as regulatory lag, supply chain pressures, and the need to maintain affordability for customers amidst rising costs. Over the calls, the focus on regulated growth and infrastructure investment has remained consistent, with an emphasis on maintaining customer affordability and reliability in service delivery.
Fortis Inc.'s recent performance has been driven by strategic investments and operational efficiency. In Q4 2025, the company reported strong earnings growth, attributed to significant capital investments totaling $5.6 billion, which bolstered their rate base and earnings. The sale of non-regulated assets in Belize and Turks and Caicos further streamlined their portfolio to focus on regulated assets, enhancing financial stability. Management expressed satisfaction with the execution of their capital plan and the resulting shareholder returns, including a 24% total shareholder return for the year. However, challenges such as regulatory lag in Arizona and cost pressures were noted, impacting earnings in certain segments. The narrative between calls shifted slightly with increased emphasis on future growth opportunities, particularly in Arizona and British Columbia, and the potential for significant new investments driven by large load growth from data centers. Overall, Fortis demonstrated robust financial health and strategic alignment with industry trends, though they remain vigilant about regulatory and market challenges.
Fortis Inc.'s forward strategy focuses on regulated growth through a $28.8 billion five-year capital plan, emphasizing transmission and distribution investments. They aim to increase their rate base by $16 billion, supporting a 7% average annual growth rate. Investments are primarily directed towards enhancing infrastructure resilience and meeting the growing demand from large data centers, particularly in Arizona. Management claims competitive advantages in their regulated asset base and operational efficiencies, such as AI-driven cost management. However, they acknowledge risks including regulatory approval processes, potential delays in large projects, and maintaining customer affordability. Analysts questioned the execution of large load projects and regulatory outcomes in Arizona, highlighting potential uncertainties. While the strategy presents exciting growth prospects, particularly with data center expansions, investors should be cautious of execution risks and regulatory dependencies. The balance between growth and maintaining strong financial metrics will be crucial.
Between the Q3 and Q4 2025 calls, Fortis demonstrated progress in executing their capital plan, with $5.6 billion invested by year-end, aligning with their guidance. The sale of non-regulated assets in Belize and Turks and Caicos was completed, as promised, to focus on regulated growth. Management's commitment to maintaining customer affordability was evident through strategic investments and operational efficiencies. However, regulatory lag in Arizona and the impact of mild weather on UNS Energy's earnings were concerns that persisted. The anticipated regulatory approvals for data center expansions in Arizona were still pending, indicating ongoing execution challenges. Overall, while Fortis met several targets, the regulatory environment and project execution timelines remain areas to watch closely.
- Monitor the progress of regulatory approvals for the 300 MW data center energy supply agreement in Arizona, expected by the end of 2026.
- Track the execution of the $28.8 billion five-year capital plan, particularly the $9.8 billion allocated to ITC for transmission investments.
- Watch for updates on the environmental assessment approval for the Tilbury LNG storage expansion project in British Columbia, which could add $300 million in capital investments.
- Observe developments in the Arizona rate cases, particularly the outcome of the UNS Gas general rate application and its impact on regulatory lag.
- Evaluate Fortis's ability to maintain a cash flow to debt ratio above 12%, providing financial flexibility for future growth opportunities.