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4 Reasons Why You Should Add FirstEnergy to Your Portfolio

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Earnings estimates for FirstEnergy Corporation (FE - Free Report) have been revised upward in the past 60 days, reflecting analyst’s optimism in the stock. The Zacks Consensus Estimate for 2018 and 2019 earnings have moved up 2.5% and 2.4% to $2.46 and $2.51, respectively.

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

Earnings & Surprise History

In second-quarter 2018, FirstEnergy delivered earnings of 62 cents per share, beating the Zacks Consensus Estimate of 53 cents by 17%.

The company’s average four-quarter positive earnings surprise is 7.8%.

Zacks Rank & VGM Score

The stock holds a Zacks Rank #2 (Buy) and 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

The company is paying dividend since 1998. Currently, its dividend yield is 3.88%, higher than industry’s 3.28% and Zacks S&P 500 composite’s 1.76%.

Investment Plans

FirstEnergy is fully regulated and making strategic investments to strengthen transmission and distribution business. The company aims to invest nearly $5.7-$6.7 billion for strengthening its distribution network through 2021.

Under the “Energizing the Future” plan, the company plans to invest $1.1 billion in 2018, which will be growing up to $1.2 billion per year from 2019 through 2021. The company’s modernization drive will boost service reliability and lead to customer retention.

Price Movement

The shares of FirstEnergy have gained 15.0% in the past 12 months, against the industry’s decline of 5.5%.

 

Other Stocks to Consider

A few top-ranked stocks from the same space are NRG Energy, Inc. (NRG - Free Report) , Algonquin Power & Utilities Corp. (AQN - Free Report) and Ameren Corp. (AEE - Free Report) .

NRG Energy sports a Zacks Rank #1 (Strong Buy). The company delivered an average earnings surprise of 213.28% in the past four quarters. The Zacks Consensus Estimate for earnings moved up 3.5% in the past 30 days. You can see the complete list of today's Zacks #1 Rank stocks here.

Algonquin Power & Utilities holds a Zacks Rank #2. The company delivered an average earnings surprise of 36.39% in the past four quarters. The Zacks Consensus Estimate for earnings moved up 3.0% in the past 30 days.

Ameren Corporation holds a Zacks Rank #2 (Buy). The company delivered an average earnings surprise of 7.69% in the past four quarters. The Zacks Consensus Estimate for earnings moved up 5.2% in the past 30 days.

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