FirstEnergy Corporation’s FE initiative to further strengthen transmission and distribution operations should boost its performance. The company’s ongoing investments should increase grid reliability and enable it to serve customers efficiently.

However, this Zacks Rank #3 (Hold) company faces risks related to delays in the base rate request approval and seasonal factors.

Tailwinds for FirstEnergy

The utility’s efforts to expand its regulated generation mix stabilized its earnings trajectory. In the past few years, the company witnessed a successful broadening of regulated operations and a transition to becoming a fully regulated utility company. FirstEnergy is gaining from improving economic conditions and rising demand from commercial and industrial groups compared with the previous year.

FirstEnergy witnessed a filed settlement in 2024 for its new four-year Grid Modernization II program with the Ohio Commission. With a four-year investment of $421 million, FE aims to expand the deployment of Grid Modernization technologies and reduce the frequency of power outages. This investment also includes the deployment of 1.4 million smart meters to further deliver safe, reliable power and promote modern experiences for customers.

In the past several years, its Regulated Distribution segment has experienced rate base 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 will install advanced equipment and technologies that will strengthen and modernize its transmission and distribution infrastructure.

FE’s Headwinds

FirstEnergy cannot guarantee that any base rate request filed will be granted in whole or in part. Any denial of, or delay in, base rate request could restrict the company from fully recovering its service costs, which might adversely impact its operations, cash flows and financial condition.

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. Demand for electricity in the service territories historically peaks during the summer and winter months. Mild weather conditions may result in reduced power sales and, consequently, lower revenues, earnings and cash flow.

FE’s Stock Price Performance

In the past month, shares of the company have lost 3.8% compared with the industry’s 7.1% decline.

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Stocks to Consider

Some better-ranked stocks from the same industry are Vistra Corp. VST, sporting a Zacks Rank #1 (Strong Buy) at present, and WEC Energy Group WEC and Pinnacle West Capital Corporation PNW, holding a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

VST’s long-term (three to five years) earnings growth rate is 17.4%. The Zacks Consensus Estimate for the company’s 2025 earnings per share (EPS) is pinned at $6.06, indicating year-over-year growth of 35.3%.

WEC Energy’s long-term earnings growth rate is 7.55%. The Zacks Consensus Estimate for the company’s 2025 EPS is pegged at $5.24, indicating a year-over-year improvement of 7.8%.

PNW’s long-term earnings growth rate is 5.58%. The company delivered an average earnings surprise of 246.2% in the last four quarters.

 

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FirstEnergy Corporation (FE) : Free Stock Analysis Report

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