Value
5.5/10data confidence 83%| Component | Sub-score |
|---|---|
| P/E | 5.2 |
| P/S | 8.7 |
| EV/EBITDA | 4.7 |
| Fwd P/E | 6.3 |
| PEG | 3.8 |
- ▸Forward P/E: 20.6x
- ▸PEG: 2.90
FTS · Why this verdict
Why Fortis (FTS) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictSELL
Overall score4.4/10
ConfidenceHIGH
MacroNEUTRAL
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
The company has beaten earnings estimates in three of the last four quarters, with the most recent quarter delivering in line with expectations — modest but consistent execution above consensus that reflects a relatively predictable earnings profile. Earnings | EPS surprise returns to positive territory in the next reported quarter, with the in-line result proving to be an isolated outcome rather than the start of a softer trend. | →Stable |
| CounterWith an average quarterly surprise of roughly 4% and a most-recent in-line result, the magnitude of beats is narrow and the buffer above consensus estimates appears to be thinning — a pattern that leaves little margin for execution shortfall. | ||
Free cash flow is negative — the business is not converting reported earnings into cash — a critical quality red flag flagged at the earnings quality level, where the gap between reported net income and actual cash generation is severe. Quality breakdown | Free cash flow turns positive and reaches at least 50% of net income over the next four reported quarters, signaling a meaningful improvement in earnings quality. | →Stable |
| CounterOperating margin scores at the top of its range within the quality assessment and net margins are above average — if underlying profitability is genuine, the current divergence between reported income and free cash flow may prove temporary rather than chronic. | ||
The dividend is flagged as a potential yield trap — a combination of a high reported yield and free cash flow that is negative means the payout may be funded by sources other than organic cash generation, raising questions about its long-term sustainability. Catalyst breakdown | Free cash flow turns positive and covers declared annual dividends at a ratio of 1.0 times or above for 2 consecutive quarters, confirming the payout is sustainably funded. | →Stable |
| CounterA dividend safety score of 7 out of 10 within the catalyst dimension is in the moderate-to-healthy range, suggesting the near-term dividend risk may be less acute than the yield trap flag implies; the safety assessment may account for financing capacity beyond free cash flow alone. | ||
The stock has already risen above its near-term technical resistance target, with the risk/reward geometry unfavorable — a setup where the current price offers no meaningful headroom to the upside and the risk of a pullback toward the stop level outweighs potential gains. Price targets | A pullback to where the stock offers more than 5% upside to the resistance level would restore a more balanced risk/reward and make the setup actionable. | →Stable |
| CounterThe technical configuration shows a golden cross, bullish MACD, and rising on-balance volume — breakout continuation patterns that can carry names above prior resistance when broader market conditions are supportive. | ||
The company has beaten earnings estimates in three of the last four quarters, with the most recent quarter delivering in line with expectations — modest but consistent execution above consensus that reflects a relatively predictable earnings profile.
→StableEarnings
- Expectation
- EPS surprise returns to positive territory in the next reported quarter, with the in-line result proving to be an isolated outcome rather than the start of a softer trend.
CounterWith an average quarterly surprise of roughly 4% and a most-recent in-line result, the magnitude of beats is narrow and the buffer above consensus estimates appears to be thinning — a pattern that leaves little margin for execution shortfall.
Free cash flow is negative — the business is not converting reported earnings into cash — a critical quality red flag flagged at the earnings quality level, where the gap between reported net income and actual cash generation is severe.
→StableQuality breakdown
- Expectation
- Free cash flow turns positive and reaches at least 50% of net income over the next four reported quarters, signaling a meaningful improvement in earnings quality.
CounterOperating margin scores at the top of its range within the quality assessment and net margins are above average — if underlying profitability is genuine, the current divergence between reported income and free cash flow may prove temporary rather than chronic.
The dividend is flagged as a potential yield trap — a combination of a high reported yield and free cash flow that is negative means the payout may be funded by sources other than organic cash generation, raising questions about its long-term sustainability.
→StableCatalyst breakdown
- Expectation
- Free cash flow turns positive and covers declared annual dividends at a ratio of 1.0 times or above for 2 consecutive quarters, confirming the payout is sustainably funded.
CounterA dividend safety score of 7 out of 10 within the catalyst dimension is in the moderate-to-healthy range, suggesting the near-term dividend risk may be less acute than the yield trap flag implies; the safety assessment may account for financing capacity beyond free cash flow alone.
The stock has already risen above its near-term technical resistance target, with the risk/reward geometry unfavorable — a setup where the current price offers no meaningful headroom to the upside and the risk of a pullback toward the stop level outweighs potential gains.
→StablePrice targets
- Expectation
- A pullback to where the stock offers more than 5% upside to the resistance level would restore a more balanced risk/reward and make the setup actionable.
CounterThe technical configuration shows a golden cross, bullish MACD, and rising on-balance volume — breakout continuation patterns that can carry names above prior resistance when broader market conditions are supportive.
TrendMatrix Research · core thesis
Engine thesis — one sentence
Fortis has delivered mostly positive earnings results — three beats out of the last four quarters — with constructive technical momentum, but free cash flow is negative, the dividend yield is flagged as potentially unsafe, and the stock has already risen above its near-term technical resistance target with an unfavorable risk/reward.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Per-dimension breakdown
Quality
4.5/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 2.5 |
| ROA | 2.0 |
| Gross margin | 5.1 |
| Op margin | 10.0 |
| Net margin | 7.4 |
| Current ratio | 1.9 |
| FCF quality | 0.0 |
| Moat | 4.5 |
| Piotroski F | 6.7 |
- ▸Earnings quality RED FLAG: -147% FCF/NI
- ▸No competitive moat
Growth
2.4/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 3.0 |
| EPS growth | 1.8 |
Momentum
3.9/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 5.5 |
| MACD | 6.9 |
| OBV | 1.0 |
| MA position | 6.0 |
| Volume | 0.1 |
- ▸Volume distribution (falling OBV)
- ▸Above 200-day MA
Sentiment
4.9/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 5.0 |
| Price target | 4.8 |
| erm sentiment | 5.0 |
Insider
5.0/10data confidence 50%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 5.0 |
- ▸No net insider activity — $0 (0.000% of mkt cap)
Peer rank
3.6/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 4.0 |
| quality rank | 3.7 |
| growth rank | 1.5 |
Technical
6.3/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 5.2 |
| support resistance | 4.4 |
| 52w position | 9.4 |
Risk (lower is worse)
4.3/10data confidence 100%| Component | Sub-score |
|---|---|
| days to cover | 0.0 |
| volatility | 8.6 |
| put call | 1.3 |
| implied vol | 1.5 |
| beta | 10.0 |
| debt equity | 4.3 |
- ▸Elevated put/call: 1.80
- ▸High IV: 71%
Catalyst
5.7/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 10.0 |
| earnings timing | 5.0 |
| surprise avg | 4.5 |
| dividend safety | 4.2 |
- ▸Strong earnings: 3B/0M
- ▸Yield trap warning: high yield but unsafe
How the verdict was assembled
Engine trigger
Multiple concerning factors. Consider reducing position.
Engine technical detail
verdict_path:
L4:PATH_F_SELLPassed (6)
- INSIDER:OK
- 8K:CLEAN
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:25d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (2)
- MOMENTUM:3.9<4.5
- ASYMMETRY:-3.2=NEGATIVE
Warning (0)
none
Reward-to-Risk
-3.21
Upside
-16.1%
Downside
5.0%
Sizing output
AVOID
SetupBreakout — Golden cross, above all MAs, RSI 49, MACD bullish
EdgeCatalyst-Driven — Earnings in 25d with 3/4 beat streak
SuitabilityModerate — Balanced profile
Investment implication
The F-path SELL output reflects an overall score of 3.9 below the 5.6 soft trigger — multiple weakening dimensions accumulated rather than a single hard-floor breach. The strongest dimension ( Technical at 6.3) was not enough to lift the adjusted overall above the threshold. Co-occurring failed gates ( MOMENTUM:3.9<4.5, ASYMMETRY:-3.2=NEGATIVE) reinforce the read. Current asymmetry R:R is -3.21 — supplementary context, not the trigger for this path.
The strongest dimensions are Technical at 6.3, Catalyst at 5.7, and Value at 5.5; the weakest are Growth at 2.4, Peer rank at 3.6, and Momentum at 3.9. The V9 engine flagged 2 failed gates, producing an asymmetric reward-to-risk of -3.21 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Earnings Mostly On Track
Trip ifEPS surprise falls below 0% for 2 consecutive quarters.
- P2Negative Free Cash Flow
Trip ifFree cash flow turns positive and reaches at least 50% of net income for 2 consecutive quarters.
- P3Dividend Sustainability Risk
Trip ifFree cash flow turns positive and covers declared annual dividends at a ratio of 1.0x or above for 2 consecutive quarters.
- P4Price Past Resistance Limited Room
Trip ifStock price falls to $53.00 or below, creating more than 6% upside to the technical resistance level.