Stock of the Day

March 16, 2020

FirstEnergy (FE)

$42.34
+$0.96 (+2.3%)
Market Cap: $24.37B

About FirstEnergy

FirstEnergy Corp., through its subsidiaries, generates, transmits, and distributes electricity in the United States. It operates through Regulated Distribution and Regulated Transmission segments. The company owns and operates coal-fired, nuclear, hydroelectric, wind, and solar power generating facilities. It operates 24,080 circuit miles of overhead and underground transmission lines; and electric distribution systems, including 274,518 miles of overhead pole line and underground conduit carrying primary, secondary, and street lighting circuits. The company serves approximately 6 million customers in Ohio, Pennsylvania, West Virginia, Maryland, New Jersey, and New York. FirstEnergy Corp. was incorporated in 1996 and is headquartered in Akron, Ohio.

FirstEnergy Bull Case

Here are some ways that investors could benefit from investing in FirstEnergy Corp.:

  • FirstEnergy Corp. recently announced a quarterly dividend of $0.425 per share, which translates to an annualized yield of 4.11%. This consistent dividend payment can provide a reliable income stream for investors.
  • The stock price of FirstEnergy Corp. is currently at $41.37, showing a recent increase of 1.7%. This upward movement may indicate positive market sentiment and potential for further growth.
  • Institutional ownership is strong, with 89.41% of the stock held by institutional investors and hedge funds. High institutional ownership can signal confidence in the company's future performance.
  • Analysts have a consensus rating of "Hold" for FirstEnergy Corp., with a target price of $46.27. This suggests that there is potential for the stock to appreciate in value, making it an attractive option for investors looking for stability.
  • FirstEnergy Corp. operates in the utilities sector, which is generally considered a defensive investment. This means that the company may be less affected by economic downturns, providing a level of security for investors.

FirstEnergy Bear Case

Investors should be bearish about investing in FirstEnergy Corp. for these reasons:

  • The company's payout ratio is 109.68%, indicating that it is paying out more in dividends than it is earning. This could raise concerns about the sustainability of future dividend payments.
  • FirstEnergy Corp. has a relatively high debt-to-equity ratio of 1.58, which suggests that the company is heavily reliant on debt to finance its operations. High levels of debt can increase financial risk, especially in a rising interest rate environment.
  • Recent analyst downgrades, including a shift from "strong-buy" to "hold," may indicate a lack of confidence in the company's growth prospects, which could deter potential investors.
  • The stock has a P/E ratio of 26.69, which may be considered high compared to industry averages. A high P/E ratio can suggest that the stock is overvalued, making it a less attractive investment.
  • Market volatility can impact utility stocks like FirstEnergy Corp., and any significant fluctuations in the market could adversely affect the stock's performance.

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