Headquartered in Akron, Ohio, FirstEnergy Corp. (FE) is an energy company that provides reliable and sustainable electric utility services. With a market cap of $24 billion, FirstEnergy serves millions of customers across the Midwest and Mid-Atlantic regions, leveraging its extensive infrastructure to power homes, businesses, and industries.
Shares of this electric utility have trailed behind the broader market over the past year. The stock has gained 11.8% over this time frame, while the broader S&P 500 Index ($SPX) has rallied nearly 31.1%. In 2024, FE stock is up 13.4%, while the SPX is up 24.1% on a YTD basis.
Zooming in further, FE has lagged behind the Vanguard Utilities Index Fund ETF Shares (VPU). The exchange-traded fund has gained 29.3% over the past 52 weeks and 26.7% on a YTD basis, outpacing the FE stock's performance.
Shares of FirstEnergy declined 1.5% following the release of its Q3 earnings on Oct. 29. FirstEnergy's Q3 results fell short of expectations, driven by higher storm restoration costs, regulatory pressures in Ohio, asset sale dilution, and reduced tax benefits, despite weather-driven demand and rate-based growth benefits.
Its adjusted EPS of $0.85 missed the $0.91 consensus estimate and reflected a 3.4% year-over-year decline. Although revenue increased 5.7% annually to $3.73 billion, it came below the forecast. The company also narrowed its 2024 adjusted operating earnings guidance to a range of $2.61 to $2.71 per share.
However, the company raised its 2024 capital investment plan by 7% to $4.6 billion, reflecting a 24% increase over 2023 levels, while reaffirming its long-term annual operating earnings growth target of 6% to 8%.
For the current fiscal year, ending in December, analysts expect FirstEnergy’s EPS to grow 5.1% to $2.69 on a diluted basis. The company’s earnings surprise history is mixed. It beat or matched the consensus estimate in three of the last four quarters while missing the forecast on another occasion.
Among the 17 analysts covering FE stock, the consensus is a “Moderate Buy.” That’s based on six “Strong Buy” ratings, two “Moderate Buys,” eight “Holds,” and one “Moderate Sell.”
This configuration is less bullish than a month ago when seven analysts suggested a "Strong Buy."
On Nov. 6, Shelby Tucker from RBC Capital maintained a “Buy” rating on FirstEnergy, with a price target of $48, implying a potential upside of 15.4% from current levels.
The mean price target of $47.25 represents a 13.6% premium to FE’s current price levels. The Street-high price target of $52 suggests an upside potential of 25.1%.
