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Why Should You Invest in FirstEnergy Before Q3 Earnings?

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Earnings estimates for FirstEnergy Corporation (FE - Free Report) have been revised upward in the past 90 days, reflecting analyst’s optimism in the stock. The Zacks Consensus Estimate for 2018 and 2019 earnings inched up 2.0% and 2.4% to $2.46 and $2.52, respectively.

Shares of FirstEnergy have gained 20.4% in the past 12 months, against the industry’s decline of 3.6%.

 

Let’s focus on the factors that make FirstEnergy a profitable pick.

Zacks Rank & Surprise History

FirstEnergy carries a Zacks Rank #2 (Buy).The company’s average four-quarter positive earnings surprise is 7.8%.

VGM Score

The stock has an impressive VGM Score of B.

Here V stands for Value, G for Growth and M for Momentum with the score being a weighted combination of all three factors. Back tested results show that stocks with a favorable VGM Score of A or B coupled with a bullish Zacks Rank are the best investment options.

Dividend Yield & Return on Equity (ROE)

The company continues to pay dividend at regular intervals.Currently, its dividend yield is 3.75%higher than the industry’s 3.16%% and Zacks S&P 500 composite’s 1.83%

ROE is a measure of a company’s efficiency in utilizing shareholder’s funds. ROE for the trailing 12-months for FirstEnergy is 24.39%, higher than the industry’s level of 9.16% and Zacks S&P 500 composite’s 17.49%.

Long-Term Plans

The company’s efforts to expand regulated generation mix have enabled it to successfully broaden regulated operations and transformed it into a fully-regulated utility company. The company aims to invest nearly $5.7-$6.7 billion for strengthening distribution network through 2021. Moreover, under the Energizing the Future plan, the company plans to invest $1.1 billion in 2018, which will increase to $1.2 billion per year from 2019 through 2021.

FirstEnergy’s expanding regulated base and growing transmission lines are expected to boost earnings in the future. The Energizing the Future initiative is expected to boost the company’s overall operational strength.

Other Stocks to Consider

A few other top-ranked stocks from the same space are Ameren Corp. (AEE - Free Report) , Pacific Gas & Electric Co. (PCG - Free Report) and Algonquin Power & Utilities Corp. (AQN - Free Report) .

Ameren sports a Zacks Rank #1 (Strong Buy). The company delivered an average positive earnings surprise of 9.76% in the last four quarters. The company’s long-term growth for the next 3-5 years is pegged at 6.50%.You can see the complete list of today's Zacks #1 Rank stocks here.

Pacific Gas & Electric sports a Zacks Rank #1. The company delivered an average positive earnings surprise of 5.23% in the last four quarters. The company’s long-term growth for the next 3-5 years is pegged at 3.50%.

Algonquin Power & Utilities carries a Zacks Rank #2. The company delivered an average positive earnings surprise of 36.39% in the trailing four quarters. The company’s long-term growth for the next 3-5 years is pegged at 8.0%.

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