Fortis Inc 2

On my other blog I am today writing about My Market Trading...continue...

I own this stock of Fortis Inc. (TSX-FTS, OTC- FRTSF). I first bought this stock in 1987 and them some more in 1995 and 1998. In 2005, I sold some because it was a too big a portion of my stock portfolio. I have a total return of 13.24% per year with 8.36% per year from capital gains and 4.88% per year from dividends.

When I look at insider trading I find $8M of insider selling and a bit of insider buying, with net insider selling at $8M. Selling is by CFO, officers and directors and seems to be of stock options. Insiders not only have options, but other options type vehicles called Performance Share Unit and Deferred Share Unit

The CEO has shares worth $16M and has options are worth $37.9M. The CFO has shares worth $4M and has options worth $7.4M. An officer has shares worth $0.3M and has options worth $0.6M. A lot of officers and Subsidiary Executives of this company have options. A director has shares worth $0.6M and has options worth $0.4M. This is just to give you an idea on insider share ownership and option values.

The low, median and high median Price/Earnings Ratios are 15.90, 18.47 and 20.20. The current P/E Ratio is 19.76 that imply a reasonable stock price, if a bit towards the high end. This is based on a stock price of $33.99 and 2013 EPS of $1.72.

I get a Graham Price $28.83. The 10 year low, median and high median Price/Graham Price Ratios are 0.97, 1.16 and 1.26. The current P/GP Ratio is 1.18. Here again this implies a relatively reasonable stock price, if a bit again to the high end. Also, for a utility stock, you should be able to buy it with a P/GP Ratio of around 1.00.

I get a 10 year Price/Book Value per Share Ratio of 1.70. The current P/B Ratio is 1.58. This ratio is 93% of 10 year P/B Ratio. This implies a relatively reasonable stock price.

The current dividend yield is 3.65% and the 5 year median dividend yield is 3.41%. The current is above the 5 year median, which is good. However, it is just 7% higher and this would imply a relatively reasonable stock price.

My stock price testing is rather a surprise, as it seems to show that the current stock price is rather reasonable. The last time I was checking out utility stocks they were all over priced.

When I look at analysts' recommendations, I find Buy, Hold and Underperform recommendations. The consensus recommendation would be a Hold. The 12 months stock consensus is $35.30. This implies a total return of 7.5% with 3.65% from dividends and 3.85% from capital gains. This rather explains the Hold recommendations, as this expected 12 month total return is less than 8%.

In the news, Fortis has issued Subscription Receipts to raise money to purchase CH Energy Group Inc. There has been a delay in this acquisition, so the Fortis is seeking a change to the Subscription Receipt deadline. See an article in Daily Commercial News.

A lot of people in New York State are against the purchase of CH Energy Group by Fortis. Here is one article with negative comments. However, it is most likely this purchase will go through.

A young blogger wanting $25,000 in dividends per year bought this stock at the end of 2012. An article in Proactive Investors talk about the 1st quarterly result for Fortis and the profits being up mainly up because of a special payment.

Some analysts like it as it is steady dependable company. Other think you can get better dividend growth elsewhere so would not suggesting buying Fortis. I have it because it is a steady dependable non-exciting stock. This all depends on your point of view, of course, and what you want in a stock. I like to have some steady dependable companies in my portfolio and I have done well over the longer term with this stock. See my spreadsheet at fts.htm.

This is the second of two parts. The first part was posted on Friday and is available here.

Fortis is a diversified, international distribution utility holding company. Its regulated holdings include electric distribution utilities in five Canadian provinces and three Caribbean countries and a natural gas utility in British Columbia. Fortis owns and operates non-regulated generation assets across Canada and in Belize and Upper New York State. It also owns hotels and commercial office and retail space primarily in Atlantic Canada. Its web site is here Fortis Inc.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.