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Why Is FirstEnergy (FE) Up 2.9% Since Its Last Earnings Report?

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It has been about a month since the last earnings report for FirstEnergy Corporation (FE - Free Report) . Shares have added about 2.9% in that time frame.

Will the recent positive trend continue leading up to its next earnings release, or is FE due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

FirstEnergy Beats Q4 Earnings Estimates, Lags Sales

FirstEnergy Corporation reported fourth-quarter 2017 operating earnings of 71 cents per share, beating the Zacks Consensus Estimate of 69 cents by 2.9%. Quarterly earnings improved 86.8% year over year.

On a GAAP basis, the company reported loss of $5.62 per share compared with a loss of $13.44 in the prior-year quarter due to impairments & plant exit costs for the company's competitive generation fleet and charges related to the Tax Cuts and Jobs Act.  

Total Revenues


FirstEnergy generated total revenues of $3,442 million in fourth-quarter 2017, missing the Zacks Consensus Estimate of $3,485 million by 1.23%.

Revenues inched up 1.98% from $3,375 million in the year-ago quarter. The top line improved primarily on the back of higher regulated transmission and distribution revenues.

Highlights of the Release

Total electric delivery increased 563 thousand megawatt-hours (MWh) year over year. Residential sales rose 3.9%, owing to heating degree days. The figure was higher by 9% from the year-ago quarter.

The year-over-year increase in distribution deliveries to industrial customers more than offset the drop in delivery volumes to commercial customers.

Financial Update

FirstEnergy's cash on hand as of Dec 31, 2017, was $589 million, up from $199 million as of Dec 31, 2016.

Long-term debt and other long-term obligations as of Dec 31 were $21,115 million compared with $18,192 million as of Dec 31, 2016.

Net cash provided from operating activities was $3,808 million, up 12.6% from $3,383 million in 2016.

Guidance

FirstEnergy issued the operating earnings guidance for 2018 in the range of $2.25-$2.55 per share. For the first quarter of 2018, earnings are estimated in the range of 60-70 cents.

FirstEnergy expects to invest $10-$12 billion in 2018 to 2021 time frame. Majority of the capital expenditure will be utilized to strengthen its regulated transmission and distribution lines.
 

How Have Estimates Been Moving Since Then?

It turns out, fresh estimate have trended downward during the past month. There has been one revision lower for the current quarter. In the past month, the consensus estimate has shifted by 17.4% due to these changes.

VGM Scores

At this time, FE has a strong Growth Score of A, though it is lagging a lot on the momentum front with a D. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Our style scores indicate that the stock is more suitable for growth investors than value investors.

Outlook

Estimates have been broadly trending downward for the stock and the magnitude of this revision indicates a downward shift. Interestingly, FE has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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