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Fortis Upgraded to Strong Buy Based on Solid Performance

Zacks Equity Research

On Mar 24, Zacks Investment Research upgraded Fortis Inc. FTS to a Zacks Rank #1 (Strong Buy).

Why the Upgrade?

Fortis has been witnessing a rise in earnings estimates on the back of strong performance. This electric and natural gas utility has reported positive earnings surprises in last two quarters, with an average surprise beat of 20.61%. The company’s long term earnings growth is pegged at 5.50%.

Fortis has long term investment plans to strengthen its existing infrastructure and also add renewable assets to its portfolio. It intends to invest $13 billion in 2017–2021 and expects rate base to grow by $30 billion within the same time period. The company is quite confident in this respect and consequently aims to increase its annual dividend on an average by 6% through 2021.

Fortis is also gaining from its strategic acquisition of ITC Holdings—a pure play transmission company—in 2016. The acquisition expanded the company operations and was immediately accretive to its bottom line. Fortis believes this transaction will also support its earnings in 2017.

Fortis Inc. Price and Consensus

 

Fortis Inc. Price and Consensus | Fortis Inc. Quote

Fortis’ present valuation looks cheaper compared with industry average. The stock is currently trading at a P/E multiple of 17.06, lower than the industry average of 18.88. The valuation still provides some room for upside from the present standings.

The Zacks Consensus Estimate for 2017 moved up 4.9% to $1.92 per share as all estimates were revised higher over the last 60 days. For 2018, 25% estimates were revised higher over the same time frame, lifting the Zacks Consensus Estimate by 7.5% to $2.01 per share.

Other Stocks on the Horizon

Other well ranked operators in the Utility-Electric Power industry are NextEra Energy NEE, Entergy Corporation ETR and CenterPoint Energy Inc. CNP.

All the above-mentioned companies carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

NextEra Energy surpassed earnings estimates in three out of the last four quarters, with an average positive surprise of 4.32%. Its 2017 Zacks Consensus Estimate moved by 1.1% to $6.66 per share in the last 60 days.

Entergy Corporation surpassed earnings estimates in the last four quarters, with an average positive surprise of 104.4%. Its 2017 Zacks Consensus Estimate moved by 9.1% to $5.02 per share in the last 60 days.

CenterPoint Energy Inc. surpassed earnings estimates in two out of the last four quarters, with an average positive surprise of 0.4%. Its 2017 Zacks Consensus Estimate moved by 1.6% to $1.29 per share in the last 60 days.

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CenterPoint Energy, Inc. (CNP): Free Stock Analysis Report
 
NextEra Energy, Inc. (NEE): Free Stock Analysis Report
 
Entergy Corporation (ETR): Free Stock Analysis Report
 
Fortis Inc. (FTS): Free Stock Analysis Report
 
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