Breaking Down Fortis Inc. (FTS) Financial Health: Key Insights for Investors

You're looking at Fortis Inc. (FTS) because you need stability and growth in a volatile market, and honestly, who doesn't want a company that has raised its dividend for 52 consecutive years? This isn't a high-flying tech stock; it's a regulated utility powerhouse, but the 2025 fiscal year data shows real momentum you can't ignore. Wall Street analysts are forecasting a consensus Earnings Per Share (EPS) around $3.52 per share, reflecting strong performance, especially from its U.S. electric and gas operations. Plus, Fortis is putting its money where its mouth is with capital expenditures expected to hit approximately $5.6 billion this year, a commitment that drives their midyear rate base up to an estimated $41.9 billion. That massive investment is the engine for their announced 4.1% increase in the quarterly dividend to $0.64 per share, so let's dig into what this all means for your portfolio.

Revenue Analysis

If you're looking at Fortis Inc. (FTS), the direct takeaway is that its revenue is highly predictable, anchored in regulated utility operations, and showing modest, stable growth in 2025 after a flat year. The company's focus is on rate base expansion, not chasing volatile market sales, which is why you see a TTM revenue of roughly $8.60 billion USD through September 30, 2025, reflecting a steady year-over-year increase of about 2.16%.

The core of Fortis Inc.'s business model is simple: it's a fully regulated electric and gas utility leader in North America. This means the vast majority of its revenue comes from established, long-term rate structures approved by regulators, not from the fluctuating commodity prices or competitive markets that plague non-regulated players. This stability is the whole point of a utility investment. Following the disposition (sale) of its FortisTCI and Belize assets in the latter half of 2025, the company is now a pure-play, 100% regulated business.

Here's the quick math on where the money comes from. The revenue streams are diversified across multiple utility subsidiaries in the U.S. and Canada. The U.S. operations, particularly those driven by its largest segments, contribute the lion's share, making up about 54.76% of the geographical revenue. Honestly, the segment breakdown shows you exactly where the regulatory risk and growth opportunities lie.

• Regulated UNS Energy: The largest segment, contributing about 26.13% of total revenue.
• Regulated International Transmission Company (ITC): A critical transmission asset, bringing in roughly 19.37%.
• Regulated FortisBC Energy: The primary Canadian gas utility, accounting for approximately 14.47%.
• Regulated Central Hudson: This New York-based utility contributes around 11.92%.

The year-over-year revenue growth of 2.16% is driven primarily by rate base growth-the value of assets on which the company is allowed to earn a regulated return. Plus, the higher U.S. dollar-to-Canadian dollar exchange rate in 2025 provided a favorable tailwind, boosting the reported dollar revenue from its Canadian operations. For instance, the third quarter of 2025 saw a revenue of $2.13 billion, which was a clear 4.49% increase over the same period last year. This is defintely a low-risk, compounding growth story, not a breakout growth stock.

To be fair, the overall revenue growth rate is still slower than the broader US Utilities - Regulated Electric industry average, but that's the trade-off for its lower-risk profile. The recent conclusion of Central Hudson's 2024 general rate application also shifted some quarterly revenue, giving a one-time boost you need to factor out when projecting future quarters. The key action for you is to monitor the capital plan execution, as that's the real engine of future revenue growth. You can dive deeper into the ownership structure in Exploring Fortis Inc. (FTS) Investor Profile: Who's Buying and Why?

Here is the segment contribution, based on recent annual figures, which maps the company's revenue stability:

Profitability Metrics

You're looking for a clear picture of Fortis Inc.'s (FTS) financial engine, and in the regulated utilities space, profitability is all about stability and efficiency. The short answer is Fortis Inc. is highly profitable, but its margins, while strong, are slightly below the very high bar the S&P 500 Utilities sector has set in late 2025.

Fortis Inc. is defintely a margin powerhouse, which is typical for a diversified, regulated utility holding company. For the Trailing Twelve Months (TTM) ending in the second quarter of 2025, the company reported a Gross Profit Margin of approximately 72.37%. This number shows Fortis Inc.'s core strength: a high margin on revenue after the cost of power and fuel is accounted for. The Operating Profit Margin stood at a robust 28.90%, which means they're very good at controlling their day-to-day operating expenses.

Here's the quick math on their near-term performance. The company's Net Earnings attributable to common equity shareholders for the first three quarters of 2025 totaled approximately $1,292 million (CAD), with quarterly results showing consistent growth drivers like rate base expansion and favorable regulatory outcomes. This steady, predictable earnings stream is the bedrock of their long-standing dividend growth.

• Gross Profit Margin (TTM Q2 2025): 72.37%
• Operating Profit Margin (TTM Q2 2025): 28.90%
• Net Profit Margin (TTM Q2 2025): 14.98%

Margin Trends and Operational Efficiency

The trend in Fortis Inc.'s profitability is one of stable, incremental improvement, which is exactly what you want to see in a utility. Their TTM Net Profit Margin of 14.98% in the second quarter of 2025 is up from the annual 2024 margin of around 13.96%. That's a clear uptick, driven by a few key factors.

The operational efficiency analysis points directly to their regulated asset base (rate base) growth and solid cost management. The Gross Profit for the TTM ending September 30, 2025, was approximately $3.954 billion (USD), representing a 5.71% increase year-over-year. This growth is a direct result of capital investment-like the $5.2 billion annual capital plan that's on track for 2025-which expands the rate base and, through the regulatory process, increases allowed returns. Higher allowed returns on equity (ROE) and formulaic rate plans, particularly in their U.S. and Canadian operations, are the main engines translating capital spending into improved net margins.

Industry Comparison: Fortis Inc. vs. the Sector

To be fair, Fortis Inc. operates in a sector that is seeing a massive tailwind. The S&P 500 Utilities sector, as a whole, reported an estimated Net Profit Margin of 17.2% for the third quarter of 2025, a significant jump from 14.8% in the prior year. This sector surge is largely fueled by the exploding demand from data centers and electrification, which is driving record capital expenditures across the industry.

Fortis Inc.'s TTM Net Profit Margin of 14.98%, while excellent and above the sector's five-year average, is currently trailing the Q3 2025 sector average of 17.2%. This gap isn't a red flag, but a point of differentiation. Fortis Inc. is a low-risk, diversified operator, and its profitability is more about consistency than dramatic swings. The company's focus on regulated transmission and distribution-about 93% of its assets-provides resilient earnings through any economic cycle.

You can see the full context of their financial position in the comprehensive analysis at Breaking Down Fortis Inc. (FTS) Financial Health: Key Insights for Investors. For now, understand that their profitability is rock-solid, even if the sector average is temporarily inflated by a few high-flying peers. The stability is the return.

Debt vs. Equity Structure

Fortis Inc. (FTS) maintains a highly leveraged capital structure, which is typical for a capital-intensive utility, but their debt-to-equity ratio sits comfortably below the industry average, signaling a prudent approach to financing their massive infrastructure growth plan.

As of the third quarter of 2025, Fortis Inc.'s total debt stood at approximately $24.880 billion, which is a significant figure but expected for a company with a $5.2 billion annual capital plan. This total debt is overwhelmingly long-term, reflecting the stable, fixed-asset nature of their business: long-term debt was $23.449 billion, while short-term debt was a manageable $1.431 billion.

Here's the quick math on their leverage: Fortis Inc.'s Debt-to-Equity (D/E) ratio was about 1.42 as of September 2025, calculated against total stockholders' equity of $17.494 billion. This D/E ratio is a measure of financial leverage, showing that for every dollar of equity, the company uses $1.42 in debt. To be fair, this is a strong position. The average D/E ratio for the Utilities - Regulated Electric subindustry is higher, at approximately 1.53 as of November 2025. Fortis Inc. is defintely managing its leverage better than many of its peers.

The company balances this debt financing with a strong commitment to equity investors. They have a 52-year history of consecutive common share dividend increases and are targeting an average annual dividend growth of 4-6% through 2030. This commitment helps attract and retain equity investors, which is crucial for funding their extensive capital program without relying solely on debt markets. They are using debt to build, but equity to anchor their valuation.

Recent Debt Activity and Credit Profile

Fortis Inc. has been active in the debt markets to fund its capital expenditures, which are largely focused on transmission projects and energy storage. For instance, in September 2025, the company issued bonds amounting to CAD 750 million with a coupon rate of 5.1% and a maturity of 2055. This kind of long-dated issuance locks in financing for decades of infrastructure investment.

The company's credit ratings reflect its low business risk profile and diversified operations. Their current ratings are solid, though S&P has a negative outlook, which is something to watch:

• S&P: A- (Negative Outlook)
• DBRS: A (low) (Stable Outlook)
• Moody's: Baa3 (Stable Outlook)
• Fitch: BBB+ (Stable Outlook)

These investment-grade ratings are essential because they keep the cost of borrowing lower, which directly impacts the regulated rates they can charge customers. Lower borrowing costs mean better profitability and stability for investors. For a deeper dive into their long-term strategy, you can review the Mission Statement, Vision, & Core Values of Fortis Inc. (FTS).

Liquidity and Solvency

You're looking at Fortis Inc. (FTS) and seeing those low liquidity ratios, and your gut is probably telling you to pause. Honestly, for a regulated utility like Fortis Inc., a low Current Ratio isn't the red flag it would be for a tech startup or a retailer. It's a structural feature of the business model, not a sign of imminent crisis.

The core of the issue is that Fortis Inc. has a negative net working capital (current assets minus current liabilities). This is common because utilities collect cash from customers quickly, but they pay their suppliers and debt over a longer cycle. They also don't carry much inventory. As of a recent quarter in 2025, the Current Ratio was around 0.66 and the Quick Ratio (which excludes inventory) was even lower at about 0.37. This means they can't cover all their short-term bills with just their current assets. But here's the quick math: their cash flow is predictable, which is what really matters.

What truly drives Fortis Inc.'s financial health is its cash flow statement. For the trailing twelve months leading into late 2025, the company generated robust Cash Flow from Operations (CFO) of approximately $2.88 billion. This is the lifeblood of the company, coming from those stable, regulated rates. Conversely, the Cash Flow from Investing (CFI) was a significant outflow of roughly -$4.18 billion, reflecting the massive capital expenditure (CapEx) program.

This big outflow is a good thing, defintely. Fortis Inc. is a growth-by-investment story, with a projected CapEx of $5.6 billion for the full 2025 fiscal year. The financing cash flow (CFF) is where they bridge the gap. Management's plan for the long-term capital program is to fund 59% of it directly from that predictable cash from operations, with the remaining 41% coming from utility debt and equity, like their Dividend Reinvestment Plan (DRIP) and hybrid financing. This balanced funding approach is why credit rating agencies maintain investment-grade ratings, which is the real measure of a utility's solvency.

The strength here is the regulation. Since nearly all of Fortis Inc.'s revenue comes from rate-regulated assets, their cash flow is reliable, allowing them to manage this negative working capital and large debt load without major liquidity concerns. They know exactly how much cash they'll generate, which is why they can commit to a long-term capital plan and a 52-year streak of dividend growth. You can see how this strategy aligns with their core principles in their Mission Statement, Vision, & Core Values of Fortis Inc. (FTS).

• Operating Cash Flow (TTM): $2.88 billion.
• Investing Cash Flow (TTM): -$4.18 billion (High CapEx).
• 2025 CapEx Expectation: $5.6 billion.
• Action: Monitor cash flow-to-debt ratios for any deviation from the >12% target.

Valuation Analysis

You're looking at Fortis Inc. (FTS) and asking the right question: is this utility stock overvalued, undervalued, or priced just right? For a regulated utility like Fortis, which is essentially a bond-proxy, the answer is usually 'priced for stability,' but the 2025 numbers suggest a slight premium that you need to be aware of.

The core of the issue is that Fortis is a high-quality, defensive company. That stability means investors are willing to pay more for its earnings and assets than for the average stock, especially when market volatility is rising, as we've seen in November 2025. The stock has been a strong performer, gaining just shy of 23% year-to-date (YTD) as of mid-November 2025, which pushed its price near its 52-week high of $52.83. The 52-week low was $40.32, so the stock has had a solid run. It's defintely not a deep-value play right now.

Here's the quick math on Fortis's valuation multiples, using the most recent 2025 fiscal year data and TTM (Trailing Twelve Months) figures:

• Price-to-Earnings (P/E) Ratio: The trailing P/E is around 21.33, with a forward P/E of approximately 21.08. This is slightly higher than its historical average, suggesting the market is pricing in expected earnings growth.
• Price-to-Book (P/B) Ratio: At about 1.37, the P/B ratio is reasonable for a utility, indicating the stock trades at a modest premium to its net asset value.
• Enterprise Value-to-EBITDA (EV/EBITDA): The TTM EV/EBITDA as of September 2025 is approximately 12.53. This is above the industry median, confirming the premium valuation.

What this estimate hides is the quality of the earnings. Fortis's business-about 93% of assets are regulated electric and gas transmission and distribution-is incredibly stable. The premium valuation is the market's price for that low-risk, predictable cash flow, plus the company's commitment to a $28.8 billion five-year capital plan (2026-2030) that should drive rate base growth.

The Dividend and Analyst View

For a utility, the dividend is a critical valuation component. Fortis is a Dividend Aristocrat, having increased its common share dividend for 52 consecutive years. The current annual dividend is $1.77 per share (USD), giving a yield of about 3.45% as of November 2025. This is attractive in a lower-yield environment.

The dividend payout ratio-the percentage of earnings paid out as dividends-is a healthy 73.54%. This ratio is right in the sweet spot for a utility, showing the dividend is well-covered by earnings while still leaving capital for reinvestment into those growth projects. Management is targeting annual dividend growth of 4-6% through 2030, which is a clear signal of confidence in future cash flows.

The analyst consensus reflects this balanced picture of a high-quality stock trading at a full valuation. The overall consensus rating is a Moderate Buy. Out of nine analysts covering the stock, there are 1 Strong Buy, 3 Buy, and 5 Hold ratings. The average 12-month price target is C$73.65 (approximately $53.50 USD), which suggests only a small upside from the current price, confirming the stock is mostly priced correctly for its fundamentals.

If you want to dig deeper into who is buying this stock even at a premium, you should be Exploring Fortis Inc. (FTS) Investor Profile: Who's Buying and Why?

So, the takeaway is simple: Fortis Inc. is not undervalued, but it's a fair price for a blue-chip utility that consistently delivers on its dividend promise. You're buying predictable income and low volatility, not a bargain.

Risk Factors

You're looking for a clear picture of Fortis Inc. (FTS) risk profile, and the direct takeaway is this: while the company's regulated utility model offers exceptional stability, its massive capital program and the current interest rate environment are the two biggest near-term pressure points. The risks are real, but they are largely manageable.

As a seasoned analyst, I focus on what truly moves the needle. Fortis Inc. is now virtually a 100% regulated utility, which is a huge de-risking move, but that stability comes with its own set of challenges. Here's the quick math on what to watch, especially given the Q3 2025 earnings report released in November 2025.

External & Financial Risks: The Cost of Growth

The primary external risk is the regulatory environment, which directly impacts your return on equity (ROE). Fortis Inc. operates across multiple jurisdictions, and the outcome of rate cases is defintely a key driver of financial health. For example, the New York State Public Service Commission did approve Central Hudson's three-year rate plan with a solid 9.5% allowed ROE, which is a win.

But still, we see regulatory lag-the delay between investing capital and getting new rates approved-as a substantial issue. At UNS Energy, over USD$700 million of rate base is not yet reflected in customer rates, which pressures earnings until those rates kick in. Plus, the capital investment pace, expected to be around $5.6 billion for the full 2025 fiscal year, drives up leverage and heightens exposure to the changing interest rate environment.

Here's a snapshot of the core financial and external risks:

• Regulatory Lag: Delays in rate case approvals, like the USD$700 million at UNS Energy.
• High Leverage: Capital spending requires significant debt, including the $750 million corporate hybrid issuance at 5.1% in 2025.
• Weather Variability: Significant variations in weather can impact revenue and earnings, a constant for any utility.

Operational & Strategic Risks: Execution is Everything

Fortis Inc. has a massive five-year capital plan of $28.8 billion for 2026-2030, which is a huge opportunity, but it's also an operational risk. The good news is that management's strategy mitigates execution risk by focusing on smaller, lower-risk transmission and distribution projects, rather than a few massive, complex ones. About 77% of the new plan is directed toward these lower-risk areas.

However, the sheer volume of this capital program means any delays in securing agreements or regulatory approvals for incremental generation opportunities could challenge the expected 7.0% annual rate base growth through 2030. The company is also actively investing in grid resiliency to combat the physical risks from climate change, like increasingly frequent and intense weather events. They've also made great progress on the environmental side, reducing Scope 1 greenhouse gas emissions by 34% since 2019.

To summarize the key risk factors and their mitigation strategies:

If you want to dig deeper into the valuation models that account for these risks, check out the full post at Breaking Down Fortis Inc. (FTS) Financial Health: Key Insights for Investors.

Growth Opportunities

You're looking for a clear map of where Fortis Inc. (FTS) is heading, and the answer is simple: massive, low-risk capital investment in regulated assets. Fortis's future growth is defintely not a mystery; it's baked into their new, record-setting capital plan, which is the primary driver of their earnings and dividend growth.

The company just unveiled its largest-ever five-year capital plan (2026-2030) totaling $28.8 billion, an increase of $2.8 billion over the prior plan. This investment is expected to grow the midyear rate base-the value of assets they can earn a regulated return on-from an estimated $41.9 billion in 2025 to $57.9 billion by 2030. That translates to a powerful 7.0% compound annual growth rate (CAGR) for the rate base, which directly supports their long-term earnings and dividend targets.

Key Growth Drivers and Strategic Focus

Fortis is focusing its spending on essential, regulated infrastructure projects, which is the core of their low-risk strategy. They are strategically investing in transmission and distribution, with 77% of the new plan directed toward these areas. This focus is a clear action plan to meet growing electricity demand and modernize aging grids across North America.

• Transmission Investments: Significant capital is earmarked for their ITC subsidiary, particularly for the Midcontinent Independent System Operator (MISO) Long-Range Transmission Plan (LRTP) in the U.S. Midwest.
• Resource Transition: Major investments are driving the energy transition in Arizona, helping to interconnect renewables and support new load growth, including potential large customers like data centers.
• Customer and Economic Growth: Distribution investments are being made to support organic customer growth, notably in Alberta, where new customers pay for new infrastructure, improving affordability for existing ones.

This is a utility company using capital expenditure (CAPEX) as its growth engine. Their full-year 2025 capital expenditures are expected to be approximately $5.6 billion, up from earlier forecasts.

Projections and Competitive Edge

Near-term, the company's financial health looks solid. For the 2025 fiscal year, the consensus revenue estimate is approximately $8.89 billion. In the third quarter of 2025 alone, Fortis delivered adjusted earnings per share of $0.87, demonstrating stable performance across its regulated utilities. The long-term earnings growth is what matters most for a utility like this, and their goal is to drive earnings that support an annual dividend growth of 4% to 6% through 2030.

What sets Fortis apart is its competitive advantage, built on scale and regulatory stability. They have transitioned to a portfolio comprised of 100% regulated assets following the disposition of non-core assets like FortisTCI and the Belize investments in late 2025. This reduces risk and provides highly predictable cash flows, which is why Fortis has one of the longest dividend growth streaks in the market, now at 52 consecutive years. Their size and cross-border diversity-with over half of revenue from the U.S.-also provide resilience against localized economic or regulatory headwinds.

Here is a quick look at the core growth metrics from the new plan:

To dig deeper into the company's current financial standing and valuation, check out Breaking Down Fortis Inc. (FTS) Financial Health: Key Insights for Investors.