Fortum is a defensive utilities investment in a quality company with a strong balance sheet. The company strategy is to focus on core business, and quickly divesting non-core assets.
In the energy market Fortum is well positioned providing base-load and flexible energy capacity in the Scandinavian market. 90% of EBITDA results from 45TWh low CO2 hydro and nuclear power generation at competitive prices.
Fortum is valued at 10x TTM earnings. The share is fairly priced with 8% dividend yield. The dividend return has the potential to grow based on the low debt level and strong cash position. Over time I expect Fortum to increase EPS from higher margins and revenue growth driven by increased demand.