Canada's Fortis Q2 net earnings rise

Overview

• Fortis Q2 net earnings rise to C$384 mln, driven by rate base growth

• Capital expenditures reach C$2.9 bln in H1, supporting C$5.2 bln annual plan

• Co reports 34% reduction in GHG emissions compared to 2019 levels

Outlook

• Fortis expects midyear rate base to grow from C$39 bln in 2024 to C$53 bln by 2029

• Company anticipates 4-6% annual dividend growth through 2029

• Fortis does not foresee material financial impact from tariffs in 2025

• Company plans expansion in cleaner energy infrastructure and grid resiliency

Result Drivers

• RATE BASE GROWTH - Driven by investments in Eagle Mountain Pipeline and revenue reset at Central Hudson

• CURRENCY IMPACT - Favorable U.S. dollar-to-Canadian dollar exchange rate boosted earnings

• OPERATING COSTS - Increased costs and lower allowed ROE at FortisAlberta partially offset earnings growth

Key Details

Analyst Coverage

• The current average analyst rating on the shares is "hold" and the breakdown of recommendations is 4 "strong buy" or "buy", 10 "hold" and 4 "sell" or "strong sell"

• The average consensus recommendation for the electric utilities peer group is "buy."

• Wall Street's median 12-month price target for Fortis Inc is C$70.00, about 3.1% above its July 31 closing price of C$67.80

• The stock recently traded at 19 times the next 12-month earnings vs. a P/E of 20 three months ago

Press Release: ID:nGNX9s0nMm