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FirstEnergy (FE) Up 2.5% Since Last Earnings Report: Can It Continue?

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A month has gone by since the last earnings report for FirstEnergy (FE - Free Report) . Shares have added about 2.5% in that time frame, outperforming the S&P 500.

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

FirstEnergy Beats Earnings and Revenue Estimates in Q4

FirstEnergy delivered fourth-quarter 2018 operating earnings of 50 cents per share, which beat the Zacks Consensus Estimate of 48 cents by 4.17%. Quarterly earnings declined 13.7% year over year.

On a GAAP basis, the company generated earnings of 25 cents, against a loss of $5.62 incurred in the prior-year quarter.

In 2018, FirstEnergy delivered earnings of $2.59, up from $2.17 in 2017.

Total Revenues

FirstEnergy generated total revenues of $2,710 million in fourth-quarter 2018, which beat the Zacks Consensus Estimate of $2,668 million by 1.6%. The figure improved from $2,681 million in the year-ago quarter.

In 2018, FirstEnergy generated revenues of $11,261 million, up from $10,928 million a year ago.

Highlights of the Release

Total electric delivery increased 418,000 megawatt-hours (MWH), or 1.2% year over year. Residential sales rose 0.5% on a year-over-year basis. Commercial and industrial sales rose 1.7% and 1.4% year over year, respectively. Total distribution deliveries increased by 1 cent per share primarily on the back of higher weather-related and industrial usage.

Heating-degree-days were up 7% year over year and 7% above normal/

Financial Update

FirstEnergy's cash and cash equivalents as of Dec 31, 2018 were $367 million, down from $588 million as of Dec 31, 2017.

Long-term debt and other long-term obligations as of Dec 31, 2018 were $17,751 million compared with $ 18,687 million as of Dec 31, 2017.

Net cash provided from operating activities in the last three months of 2018  was $852 compared with $1,046 million in the year ago quarter.

Guidance

The company’ management guided 2019 EPS range of $2.45 to $2.75, whose mid-point of $2.60 is higher than the current Zacks Consensus Estimate for the period of $2.55. Also, the company provided first-quarter earnings guidance in the range of 60-70 cents.



 

How Have Estimates Been Moving Since Then?

Analysts were quiet during the last two month period as none of them issued any earnings estimate revisions. The consensus estimate has shifted -5.56% due to these changes.

VGM Scores

At this time, FirstEnergy has a poor Growth Score of F, however its Momentum Score is doing a lot better with an A. Following the exact same course, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.

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

Outlook

FirstEnergy has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.


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