Is It Too Late To Consider Fortis (TSX:FTS) After Strong Multi‑Year Share Gains?

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If you are wondering whether Fortis at around $77.68 a share offers solid value or is starting to look stretched, it helps to compare the recent share price with a clear valuation framework. The stock has posted returns of 0.2% over the last week and 0.1% over the last month, while year to date it sits at 9.0%, with 1 year, 3 year and 5 year returns of 18.7%, 43.8% and 71.2% respectively. Recent coverage has focused on Fortis as a large regulated utility, with attention on how its capital investment plans and funding mix could influence long term earnings and the stability of its balance sheet. Other commentary has highlighted how its track record of paying dividends fits with investor demand for income oriented stocks in the utilities sector. On Simply Wall St's 6 point valuation checklist Fortis currently scores 3 out of 6. The next sections will break down what that means across different valuation methods, then bring those models together into a clearer picture of value.

Find out why Fortis's 18.7% return over the last year is lagging behind its peers.

Approach 1: Fortis Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow, or DCF, model looks at the cash Fortis is expected to generate in the future and then discounts those cash flows back to today to estimate what the business might be worth now in CA$ terms.

For Fortis, the latest twelve month free cash flow is a cash outflow of CA$1.34b. Analysts provide explicit forecasts out to 2030, where free cash flow is projected at CA$1.51b. Simply Wall St then extends those projections further using its 2 Stage Free Cash Flow to Equity model. Across the 2026 to 2035 period, the model uses a mix of analyst inputs and extrapolated figures, all converted into today’s money using a discount rate.

Adding those discounted cash flows together gives an estimated intrinsic value of CA$168.96 per share. Against the recent share price of about CA$77.68, this points to an implied discount of around 54.0%, which indicates that the shares screen as materially undervalued on this DCF framework alone.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Fortis is undervalued by 54.0%. Track this in your watchlist or portfolio, or discover 4 more high quality undervalued stocks.FTS Discounted Cash Flow as at May 2026

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Fortis.

Approach 2: Fortis Price vs Earnings

For profitable companies like Fortis, the P/E ratio is a common way to think about value because it links what you pay per share to the earnings that each share generates. A higher or lower P/E often reflects the market’s view on two things: how fast earnings might grow in the future and how much risk investors see in those earnings.

Story Continues

Fortis currently trades on a P/E of 23.1x. That sits above the Electric Utilities industry average of about 15.7x and above the peer group average of 20.6x. Simply Wall St’s Fair Ratio for Fortis is 25.5x, which is its proprietary estimate of what a reasonable P/E could be after factoring in the company’s earnings profile, industry, profit margins, market value and risk characteristics.

This Fair Ratio can be more informative than a simple comparison with peers or the wider industry because it adjusts for differences in expected earnings growth, risk and profitability, rather than assuming all utilities should trade on the same multiple. With Fortis on 23.1x versus a Fair Ratio of 25.5x, the shares screen as modestly undervalued on this P/E based framework.

Result: UNDERVALUEDTSX:FTS P/E Ratio as at May 2026

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Upgrade Your Decision Making: Choose your Fortis Narrative

Earlier it was mentioned that there is an even better way to understand valuation, and Narratives on Simply Wall St provide that by letting you anchor a clear story about Fortis to specific forecasts for revenue, earnings and margins. You can then roll those into your own fair value and compare that to the current price, with the tool updating as new news or earnings arrive. This lets you see, for example, how one investor on the Community page might build a more optimistic Fortis view closer to the CA$85.00 analyst target, while another leans toward a more cautious stance around CA$70.00. You can then decide which story, and which fair value, best matches your own beliefs before making any buy or sell decisions.

Do you think there's more to the story for Fortis? Head over to our Community to see what others are saying!TSX:FTS 1-Year Stock Price Chart

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Companies discussed in this article include FTS.TO.

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