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Here's Why You Should Add FirstEnergy (FE) to Your Portfolio
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FirstEnergy Corporation’s (FE - Free Report) growing regulated base and distribution and transmission lines are expected to boost earnings. In the last few years, the company witnessed a successful expansion of regulated operations and a complete transition to a fully-regulated utility company. FirstEnergy’s ‘Energizing the Future’ project will add to its overall operational strength. Its strong growth opportunities make it a solid investment option in the utility sector.
The Zacks Consensus Estimate for FirstEnergy’s 2023 earnings per share (EPS) has moved up 1.2% to $2.5 in the past 60 days. This indicates a year-over-year increase of 3.73%.
Long-term (three- to five-year) earnings growth is pegged at 6.5%. The company’s current dividend yield is 3.75%, better than the Zacks S&P 500 Composite’s yield of 1.55%.
Return on Equity
Return on equity (ROE) indicates how efficiently a company has been utilizing the funds to generate higher returns. Currently, FirstEnergy’s ROE is 13.16%, higher than the industry’s average of 4.6%. This indicates that the company has been utilizing the funds more constructively than its peers in the utility electric power industry.
Debt Position
Long-term debt and other long-term obligations as of Dec 31, 2022, were $21.2 billion compared with $22.3 billion as of Dec 31, 2021. FirstEnergy has available liquidity of $4.3 billion, including $225 million in cash and cash equivalents, to meet short-term obligations.
The time to interest earned ratio at the end of fourth-quarter 2022 was 2.4. The ratio, being greater than one, reflects the firm’s ability to meet future debt obligations without difficulties.
Systematic Investments
FirstEnergy plans to invest nearly $11.4 billion in the 2023-2025 period to further strengthen its existing operations. During 2023-2025, the company expects to invest $5.9 billion in regulated distribution and $5.4 billion in regulated transmission. Such planned investment will result in an annual rate-base growth of 7% over the 2024-2025 period.
In 2022, FirstEnergy filed the new four-year Grid Modernization II program with Ohio commission and proposed a capital investment of $626 million. The first phase of the abovementioned program is nearly complete, which included the installation of automated and voltage-regulating equipment on nearly 200+ circuits and 700,000 smart meters. It also included the supporting communications infrastructure and data management systems to promote modern customer experiences and enhance the delivery of safe, reliable power.
Price Performance
In the past six months, the FirstEnergy stock has gained 15.2% compared with the industry’s average 9.8% growth.
Image Source: Zacks Investment Research
Other Stocks to Consider
A few other top-ranked stocks from the same industry are CenterPoint Energy, Inc. (CNP - Free Report) , NiSource Inc. (NI - Free Report) and Unitil Corporation (UTL - Free Report) , each holding a Zacks Rank #2 at present.
CenterPoint Energy’s long-term earnings growth is pegged at 7%. The Zacks Consensus Estimate for 2023 EPS is $1.49, implying a year-over-year increase of 7.97%.
NiSource’ long-term earnings growth is pegged at 6.8%. The Zacks Consensus Estimate for 2023 EPS is $1.57, implying a year-over-year increase of 6.8%.
Unitil Corporation’s long-term earnings growth is pegged at 7.08%. The Zacks Consensus Estimate for 2023 EPS is $2.78, implying a year-over-year increase of 7.34%.
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Here's Why You Should Add FirstEnergy (FE) to Your Portfolio
FirstEnergy Corporation’s (FE - Free Report) growing regulated base and distribution and transmission lines are expected to boost earnings. In the last few years, the company witnessed a successful expansion of regulated operations and a complete transition to a fully-regulated utility company. FirstEnergy’s ‘Energizing the Future’ project will add to its overall operational strength. Its strong growth opportunities make it a solid investment option in the utility sector.
Let’s focus on the factors that make this Zacks Rank #2 (Buy) stock a good investment option at the moment. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Growth Projections & Long-term Earnings Growth
The Zacks Consensus Estimate for FirstEnergy’s 2023 earnings per share (EPS) has moved up 1.2% to $2.5 in the past 60 days. This indicates a year-over-year increase of 3.73%.
Long-term (three- to five-year) earnings growth is pegged at 6.5%. The company’s current dividend yield is 3.75%, better than the Zacks S&P 500 Composite’s yield of 1.55%.
Return on Equity
Return on equity (ROE) indicates how efficiently a company has been utilizing the funds to generate higher returns. Currently, FirstEnergy’s ROE is 13.16%, higher than the industry’s average of 4.6%. This indicates that the company has been utilizing the funds more constructively than its peers in the utility electric power industry.
Debt Position
Long-term debt and other long-term obligations as of Dec 31, 2022, were $21.2 billion compared with $22.3 billion as of Dec 31, 2021. FirstEnergy has available liquidity of $4.3 billion, including $225 million in cash and cash equivalents, to meet short-term obligations.
The time to interest earned ratio at the end of fourth-quarter 2022 was 2.4. The ratio, being greater than one, reflects the firm’s ability to meet future debt obligations without difficulties.
Systematic Investments
FirstEnergy plans to invest nearly $11.4 billion in the 2023-2025 period to further strengthen its existing operations. During 2023-2025, the company expects to invest $5.9 billion in regulated distribution and $5.4 billion in regulated transmission. Such planned investment will result in an annual rate-base growth of 7% over the 2024-2025 period.
In 2022, FirstEnergy filed the new four-year Grid Modernization II program with Ohio commission and proposed a capital investment of $626 million. The first phase of the abovementioned program is nearly complete, which included the installation of automated and voltage-regulating equipment on nearly 200+ circuits and 700,000 smart meters. It also included the supporting communications infrastructure and data management systems to promote modern customer experiences and enhance the delivery of safe, reliable power.
Price Performance
In the past six months, the FirstEnergy stock has gained 15.2% compared with the industry’s average 9.8% growth.
Image Source: Zacks Investment Research
Other Stocks to Consider
A few other top-ranked stocks from the same industry are CenterPoint Energy, Inc. (CNP - Free Report) , NiSource Inc. (NI - Free Report) and Unitil Corporation (UTL - Free Report) , each holding a Zacks Rank #2 at present.
CenterPoint Energy’s long-term earnings growth is pegged at 7%. The Zacks Consensus Estimate for 2023 EPS is $1.49, implying a year-over-year increase of 7.97%.
NiSource’ long-term earnings growth is pegged at 6.8%. The Zacks Consensus Estimate for 2023 EPS is $1.57, implying a year-over-year increase of 6.8%.
Unitil Corporation’s long-term earnings growth is pegged at 7.08%. The Zacks Consensus Estimate for 2023 EPS is $2.78, implying a year-over-year increase of 7.34%.