FirstEnergy Corp. Faces Challenges Amid Market Struggles
FirstEnergy Corp. (FE), an electric utility based in Akron, Ohio, serves around six million customers in the Midwest and Mid-Atlantic regions. The company boasts a market capitalization of $23.3 billion and operates through regulated distribution and transmission sectors, supplying electricity to residential, commercial, and industrial clients across Ohio, Pennsylvania, West Virginia, Maryland, New Jersey, and New York.
FE Stock Struggles Behind Market Performance
Over the past year, FE stock has not matched the broader market’s performance. The stock has increased by 5.9%, contrasting sharply with the S&P 500 Index ($SPX), which soared nearly 20.5%. In 2025, FE stock is slightly up, while the SPX has gained 2.9% year-to-date (YTD).
Utilities Sector Comparison
When compared to the Utilities Select Sector SPDR Fund (XLU), which returned 30% over the last 52 weeks, FE has also fallen short of the XLU’s 4.7% YTD gain.
Challenges Impacting Investor Sentiment
Various factors have contributed to FE’s disappointing stock performance. Regulatory uncertainties in Ohio and worries about the company’s capacity to replace earnings lost from pensions and declining coal operations weigh heavily on investor sentiment. FirstEnergy is shifting away from traditional income sources, with coal earnings projected to decrease significantly. Despite ongoing investments in grid modernization and a consistent dividend, unresolved regulatory challenges and future earnings uncertainty have dampened growth expectations.
Recent Earnings Report Falls Short
On October 29, the release of FirstEnergy’s Q3 earnings led to a 1.5% drop in its shares. The adjusted earnings per share (EPS) of $0.85 missed the consensus estimate of $0.91 and marked a 3.4% decline year-over-year. While revenue increased by 5.7% to $3.73 billion, it still fell short of expectations.
Adjusted Earnings Guidance and Investment Plans
The company revised its FY2024 adjusted earnings guidance to $2.61-$2.71 per share but increased its capital investment plan by 7% to $4.6 billion, representing a 24% rise from 2023. FirstEnergy reaffirmed its long-term earnings growth target of 6%-8% annually.
Future Earnings Expectations
For FY2024, which concludes in December, analysts anticipate a 3.9% increase in FirstEnergy’s EPS to $2.66 on a diluted basis. The company’s earnings track record has been mixed, beating or matching estimates in three of the last four quarters while missing once.
Analyst Insights
Among the 17 analysts evaluating FE stock, the consensus rating is “Moderate Buy.” This includes six “Strong Buy” ratings, two “Moderate Buy” ratings, eight “Holds,” and one “Moderate Sell.”
Changing Analyst Ratings
This outlook appears less optimistic than the previous month when seven analysts rated it as a “Strong Buy.”
On January 23, Wolfe Research downgraded FirstEnergy from “Outperform” to “Peer-Perform,” citing concerns about its “low-quality” earnings from pensions and coal and ongoing uncertainties associated with the Ohio rate case.
Price Targets and Potential Upside
The average price target for FE shares is $46.67, which indicates a 16.7% premium to the stock’s current price. The highest target among analysts sits at $52, suggesting a potential upside of 30%.
On the date of publication, Kritika Sarmah did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article are solely for informational purposes. For more information, please view the Barchart Disclosure Policy here.
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