Thursday, May 15, 2014

Fortis Inc. 2

On my other blog I am today writing Kathleen Gabriel's new art show continue...

I own this stock of Fortis Inc. (TSX-FTS, OTC- FRTSF). I bought this stock as Newfoundland Light and Power Co. Ltd. Class A shares in 1987. I bought more in 1995 and 1998. This stock continues to be one of my big stock holdings.

When I look at insider trading, there is $3.2M of insider selling and net insider selling of $2.9M with insider buying at 0.3M. There are stock options but also other stock options like vehicles called Performance Share Units and Deferred Share Units.

There is insider ownership with the CEO owning shares worth around $14.3M and the CFO owning shares worth around $4M. There is not that much insider ownership beyond the CEO and CFO. Last year outstanding shares were increase because of stock options by 431,000 shares with a book value of $10M and worth around $13M at the end of 2013. This number of shares is less than 1% (at 0.2%) of total outstanding shares.

The 5 year low, median and high median Price/Earnings per Share Ratios are 16.73, 18.49 and 20.24. They are down slightly from the 10 year values. The current P/E Ratio is 19.51 based on a stock price of $32.38 and 2014 earnings estimates of $1.66. This stock price test suggests that the stock price is relatively reasonable, but towards the higher end of the reasonableness range.

I get a Graham price of $29.33. The 10 year low, median and high Price/Graham Price Ratios of 0.99, 1.16 and 1.26. The current P/GP Ratio is 1.10 based on a stock price of $32.38. This stock test suggests that the stock price is relatively reasonable.

I get a 10 year Price/Book Value per Share Ratio of 1.59. The current P/B Ratio is 1.41 based on a BVPS of $23.03 and a stock price of $32.38. The current P/B Ratio is some 11% lower than the 10 year P/B Ratio. This stock price test suggests that the stock price is reasonable.

The 5 year dividend yield is 3.50% and the current dividend yield at 3.95% is some 12.8% higher. This stock price test suggests that the stock price is relatively reasonable and towards the cheap end of the reasonableness range. This historical average dividend yield is 5.19%, a value above the current yield. However, the historical median dividend yield is 3.71% a value some 6.6% below the current dividend yield.

When I look at analysts' recommendations, I find Buy, Hold and Underperform recommendations. The most recommendations are in the Hold category and the consensus recommendation would be a Hold. The 12 month consensus stock price is $34.50. This implies a total return of 10.5%, with 6.55% from capital gains and 3.95% from dividends.

An Article in the Telegram out of St. John's talks about the president and CEO of Fortis retiring at the end of 2014. An article on WKRB's site talks about TD Bank raising the 12 month target stock price to $38.00 and keeping their stock recommendation at a Buy. An article on Ticker Report site talks about Fortis Inc missing the earnings target by $0.01. (If you are a long term investor, you should not care about one quarter.)

I would seem that the utility is currently at a reasonable price. I will be holding on to the shares I own, but will not be buying any more as I have enough of this stock in my portfolio. There is nothing surprising about insider ownership or stock options. See my spreadsheet at fts.htm.

This is the second of two parts. The first part was posted on Wednesday, May 14, 2014 and is available here. The first part talks about the stock and the second part talks about the stock price.

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. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.

See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.

No comments:

Post a Comment