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FirstEnergy (FE)
NYSE:FE
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FirstEnergy
(NYSE:FE)
62Neutral
Positive Factors
Financial Outlook
FE has seen multiple credit upgrades from all three agencies this year, improving its financial outlook.
Regulatory Success
FE has optimized its operations, delevered the balance sheet, sharply increased its growth capex and scored major regulatory wins in PA and NJ.
Negative Factors
Earnings Pressure
FE reported 4Q earnings and lowered their earnings forecast due to the removal of non-utility earnings and a reduction in the earnings contribution at the utilities.
Investor Confidence
Concerns on low-quality pension and coal earnings are resurfacing, impacting the confidence in FirstEnergy's financial health.
Regulatory Uncertainty
The Ohio rate case remains an overhang, causing uncertainty for FirstEnergy's earnings outlook.
FirstEnergy (FE) vs. S&P 500 (SPY)
Market Cap
$22.58B
Dividend Yield4.34%
Average Volume (3M)6.42M
Price to Earnings (P/E)23.1
Beta (1Y)0.31
Revenue Growth4.68%
EPS Growth-11.66%
CountryUS
Employees12,042
SectorUtilities
Sector Strength83
IndustryRegulated Utilities
Share Statistics
EPS (TTM)1.70
Shares Outstanding576,697,450
10 Day Avg. Volume10,051,259
30 Day Avg. Volume6,415,855
Financial Highlights & Ratios
PEG Ratio0.39
Price to Book (P/B)N/A
Price to Sales (P/S)2.19
Price to Cash Flow (P/CF)7.20
P/FCF Ratio0.00
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$44.20Price Target Upside15.68% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering13
FirstEnergy Business Overview & Revenue Model
Company DescriptionFirstEnergy Corp. engages in the generation, transmission and distribution of electricity as well as energy management and other energy-related services through its subsidiaries. It operates through the following business segments: Regulated Distribution, Regulated Transmission and Corporate. The Regulated Distribution segment distributes electricity through FirstEnergy's utility operating companies, serving various customers. The Regulated Transmission segment transmits electricity through transmission facilities owned and operated by FirstEnergy's utilities and the regulatory assets. The Corporate segment reflects corporate support not charged to FE's subsidiaries, interest expense on FE's holding company debt and other businesses that do not constitute an operating segment. FirstEnergy was founded in 1996 and is headquartered in Akron, OH.
How the Company Makes MoneyFirstEnergy makes money primarily through its regulated utility operations, where it generates revenues by selling electricity to residential, commercial, and industrial customers. The company earns income from the regulated rates approved by state public utility commissions, which allow them to recover the costs of providing electricity and earn a reasonable return on their investments. Additionally, FirstEnergy's transmission operations contribute significantly to its revenue. The company charges fees for the use of its transmission network, facilitating the flow of electricity across its service areas. Furthermore, FirstEnergy engages in competitive energy services, where it sells electricity and energy-related products to wholesale and retail customers, providing another revenue stream. Strategic partnerships, regulatory incentives, and investments in grid modernization and renewable energy also play a role in enhancing the company's earnings potential.
FirstEnergy Financial Statement Overview
Summary
FirstEnergy shows stable revenue growth and strong operational margins, but is challenged by rising expenses and high leverage. Improving equity suggests strengthening financial position, though cash flow issues persist.Income Statement
The company has shown stable revenue growth with a 4.68% increase in 2024. Gross profit margin remains robust at 67.51%, indicating effective cost management. However, the net profit margin decreased to 7.26% from the previous year due to rising expenses, impacting overall profitability. The EBIT and EBITDA margins are strong at 17.63% and 30.45%, respectively, reflecting solid operational efficiency.75
Positive
Balance Sheet
The debt-to-equity ratio remains high at 1.93, which could pose a risk in terms of leverage. However, the equity growth indicates improving shareholder equity, as seen by the rise in stockholders' equity to $12.455 billion. Return on equity is modest at 7.85%, suggesting room for improvement in generating returns on shareholder investments. The equity ratio of 23.94% indicates moderate financial stability.65
Positive
Cash Flow
Free cash flow remains negative at -$1.139 billion, showing some improvement from previous years. Operating cash flow has improved significantly, reaching $2.891 billion from the previous year's $1.387 billion, indicating better cash generation from core operations. The free cash flow to net income ratio is negative, highlighting ongoing challenges in covering capital expenditures and dividends.60
Neutral
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 13.47B | 12.87B | 12.46B | 11.13B | 10.79B | Gross Profit |
| 9.10B | 8.22B | 7.87B | 7.69B | 7.72B | EBIT |
| 2.38B | 2.27B | 2.62B | 2.75B | 2.16B | EBITDA |
| 4.10B | 3.73B | 3.45B | 4.24B | 3.39B | Net Income Common Stockholders |
| 978.00M | 1.10B | 406.00M | 1.28B | 1.08B |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 111.00M | 137.00M | 160.00M | 1.46B | 1.73B | Total Assets |
| 52.04B | 48.77B | 46.11B | 45.43B | 44.46B | Total Debt |
| 24.02B | 24.91B | 21.65B | 23.85B | 24.48B | Net Debt |
| 23.91B | 24.77B | 21.49B | 22.39B | 22.74B | Total Liabilities |
| 38.32B | 37.85B | 35.47B | 36.76B | 37.23B | Stockholders Equity |
| 12.46B | 10.44B | 10.17B | 8.68B | 7.24B |
| Cash Flow | Free Cash Flow | |||
| -1.14B | -1.97B | -73.00M | 366.00M | -1.23B | Operating Cash Flow |
| 2.89B | 1.39B | 2.68B | 2.81B | 1.42B | Investing Cash Flow |
| -4.35B | -3.65B | -3.08B | -2.56B | -2.91B | Financing Cash Flow |
| 1.43B | 2.24B | -912.00M | -542.00M | 2.61B |
FirstEnergy Technical Analysis
Negative
38.21
Price Trends
39.68
Negative
40.37
Negative
40.35
Negative
Market Momentum
-0.39
Positive
40.80
Neutral
25.12
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For FE, the sentiment is Negative. The current price of 38.21 is below the 20-day moving average (MA) of 40.15, below the 50-day MA of 39.68, and below the 200-day MA of 40.35, indicating a bearish trend. The MACD of -0.39 indicates Positive momentum. The RSI at 40.80 is Neutral, neither overbought nor oversold. The STOCH value of 25.12 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for FE.
FirstEnergy Risk Analysis
FirstEnergy disclosed 47 risk factors in its most recent earnings report. FirstEnergy reported the most risks in the “Legal & Regulatory” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
FirstEnergy Peers Comparison
Overall Rating
UnderperformOutperform
Sector (65)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
77 Outperform | $91.39B | 20.71 | 9.10% | 3.53% | 4.46% | 54.09% | |
77 Outperform | $98.82B | 22.56 | 13.61% | 3.20% | 5.83% | 10.23% | |
77 Outperform | $27.36B | 19.50 | 12.32% | 3.14% | -1.13% | 0.16% | |
73 Outperform | $55.68B | 19.22 | 11.37% | 3.37% | 2.76% | 31.53% | |
72 Outperform | $43.63B | 17.70 | 9.34% | 3.55% | 5.98% | 4.99% | |
65 Neutral | $11.99B | 15.63 | 6.50% | 4.40% | 7.00% | 0.55% | |
62 Neutral | $22.58B | 23.10 | 8.54% | 4.34% | 4.68% | -11.66% |
* Utilities Sector Average
Performance Comparison
FE
FirstEnergy
38.21
1.69
4.63%
AEP
American Electric Power
102.96
23.04
28.83%
DTE
DTE Energy
131.36
24.19
22.57%
DUK
Duke Energy
116.64
24.70
26.87%
EXC
Exelon
42.61
7.05
19.83%
SO
Southern Co
88.68
21.08
31.18%
FirstEnergy Earnings Call Summary
Earnings Call Date: Feb 26, 2025 | % Change Since: -11.24% | Next Earnings Date: Apr 24, 2025
Earnings Call Sentiment Neutral
The earnings call reflects a mixed sentiment with significant achievements in regulatory approvals, investments, and improved credit ratings, but also challenges from external factors like weather-related sales declines and interest rate impacts. The company is focused on maintaining financial discipline and driving future growth.Highlights
Record Earnings and Growth in Core Earnings
FirstEnergy reported 2024 GAAP earnings of $1.70 per share and operating earnings of $2.63 per share, within the forecasted guidance range. Core earnings grew by 33% from 2022 to 2024, highlighting the strength of their regulated operations.
Significant Regulatory Achievements
Over the past 18 months, FirstEnergy completed rate reviews in four of its five states, resulting in a net annual revenue increase of approximately $450 million. The Pennsylvania Commission approved a $225 million base rate case settlement.
Investment and Infrastructure Advances
FirstEnergy invested $4.5 billion in 2024, surpassing their original plan by 5%. The Energize365 program aims to invest $28 billion through 2029, representing an 8% increase from their previous five-year plan.
Improved Credit Ratings
FirstEnergy achieved a total of 40 ratings upgrades in 2024, more than doubling the number of upgrades in the entire U.S. electric utility sector in 2023. All subsidiaries are now investment grade.
Lowlights
Headwinds Impacting Earnings
Earnings were affected by lower sales volumes due to mild weather and unusual storm activity, which didn't meet deferral requirements. Ohio revenues were below plan due to the ESP-5 order.
Interest Rate and Regulatory Challenges
Higher financing costs due to increased interest rates and a 50-basis point reduction in ATSI transmission rates negatively impacted earnings. Ohio DCR revenue caps were frozen, affecting future earnings potential.
Volatility in Non-Core Earnings
Non-core earnings from pension and Signal Peak decreased by 59% from 2022 to 2024, highlighting volatility in these areas.
Company Guidance
In the Fourth Quarter 2024 Earnings Conference Call, FirstEnergy Corp. provided guidance for the upcoming year, highlighting key financial metrics and strategic goals. For 2024, FirstEnergy reported GAAP earnings of $1.70 per share and operating earnings of $2.63 per share, within the forecasted guidance range. Looking ahead to 2025, the company introduced a core earnings per share guidance range of $2.40 to $2.60, reflecting a 5.5% growth from the previous year. The company plans to invest $5 billion in its regulated properties in 2025, marking an 11% increase over 2024, with a focus on grid modernization and reliability enhancements. FirstEnergy's comprehensive capital investment program, Energize365, anticipates a $28 billion investment through 2029, aiming for a 9% compounded annual rate-based growth. The company also achieved a total of 40 ratings upgrades in 2024 and maintained its investment-grade status across subsidiaries. FirstEnergy's strategy emphasizes financial discipline, regulatory commitments, and sustainable growth, with a forecasted core earnings compounded annual growth rate of 6% to 8% for the 2025-2029 period.FirstEnergy Corporate Events
Business Operations and StrategyFinancial Disclosures
FirstEnergy Reports Strong 2024 Financial Results and Future Plans
Positive
Feb 26, 2025
FirstEnergy Corp. reported its financial results for the fourth quarter and full year of 2024, highlighting GAAP earnings of $1.70 per share and non-GAAP earnings of $2.63 per share, both within the company’s guidance range. The company invested $4.5 billion in 2024 to improve grid reliability, marking a 20% increase from 2023, and plans to extend its Energize365 capital investment program through 2029 with $28 billion in planned investments. Despite a decline in unregulated legacy investments, FirstEnergy’s core business fundamentals have improved, and the company has introduced a 2025 Core earnings guidance with a targeted 6-8% compound annual growth rate through the five-year planning period.
Executive/Board ChangesBusiness Operations and Strategy
FirstEnergy Names Brian X. Tierney as Board Chair
Positive
Dec 18, 2024
FirstEnergy Corp. announced that its Board of Directors has appointed Brian X. Tierney, the current President and CEO, as the Chair of the Board, effective January 1, 2025. This move is intended to strengthen the company’s leadership as it continues its Energize365 capital investment program, aiming to deliver more secure and reliable energy. The appointment highlights FirstEnergy’s strategic direction and commitment to shareholder value, with John W. Somerhalder II remaining on the Board and Lisa Winston Hicks continuing as Lead Independent Director.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.