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FirstEnergy (FE) to Gain From Regulated Operations & Investments

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FirstEnergy Corporation (FE - Free Report) continues to benefit from a growing regulated base. The expansion of distribution and transmission lines is expected to further improve its operations. The company’s strategic investment is likely to enhance grid reliability and enable efficient customer service.

However, this Zacks Rank #3 (Hold) company faces risks related to seasonal factors and strict regulations for its coal-fired generation plants.


The utility’s efforts to expand its regulated generation mix provided stability to its earnings trajectory. In the last few years, FE witnessed a successful broadening of regulated operations and a complete transition to become a fully regulated utility company.

In April 2024, FirstEnergy witnessed a filed settlement of its new four-year Grid Modernization II program with the Ohio commission. With a four-year investment of $421 million, the company aims to expand the deployment of Grid Modernization technologies and help reduce the frequency of power outages.

FirstEnergy’s strategic investment should help it serve its 6 million customers more efficiently. In the past several years, Regulated Distribution has experienced rate-based growth through investments. The company’s ‘Energize365’ is a multi-year grid evolution platform, focused on enhancing the customer experience while maintaining its strong affordability position with rates at or below its in-state peers.

With planned investments of $26 billion between 2024 and 2028, the company is expected to install advanced equipment and technologies that will strengthen and modernize its transmission and distribution infrastructure.


FirstEnergy’s coal-fired generating plants might incur more costs in complying with the federal, state and local environmental statutes for rules and regulations related to air emissions, including GHGs and CCR disposal. These legal requirements and any future initiatives may impose substantial additional costs, thereby affecting the company’s profitability.

The sale of electric power is generally a seasonal business, and weather patterns can have a material impact on FirstEnergy’s Regulated Distribution segment’s operating results. Mild weather conditions may result in lower power sales and, consequently, lower revenues.

Price Performance

In the past six months, shares of FirstEnergy have risen 4.5% against the industry’s 1.2% decline.


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Stocks to Consider

Some better-ranked stocks from the same industry are DTE Energy (DTE - Free Report) , Pinnacle West Capital Corporation (PNW - Free Report) and PPL Corporation (PPL - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

DTE’s long-term (three to five years) earnings growth rate is 8.2%. The Zacks Consensus Estimate for DTE’s 2024 earnings per share (EPS) indicates an increase of 16.9% from the previous year’s recorded number.

PNW’s long-term earnings growth rate is 8.22%. The Zacks Consensus Estimate for 2024 EPS implies an improvement of 8.2% from the bottom line recorded in 2023.

PPL’s long-term earnings growth rate is 6.82%. The Zacks Consensus Estimate for 2024 EPS implies a year-over-year increase of 6.9%.


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