FirstEnergy Co., Ltd. (FE – (Free Report) continues to benefit from an expanded regulatory base, and expanded distribution and transmission lines are expected to further improve operations. The company’s strategic investments have the potential to improve grid reliability and enable efficient customer service. FE’s Energize365 initiative strengthens overall operational strength.
However, this Zacks Rank #3 (Hold) company faces risks related to timely completion of projects and seasonal factors.
Tailwind
The utility’s efforts to expand its regulated generation mix have provided stability to its revenue trajectory. Over the past several years, we have successfully expanded our regulated business and successfully transitioned into a fully regulated utility company.
The company expects to deploy 1.2 million smart meters and supporting communications infrastructure and data management systems by 2025 to enhance the delivery of safe and reliable electricity to customers.
FE’s Energize365 is a multi-year grid evolution platform focused on improving the customer experience while maintaining high affordability with rates at or below par with stateside peers. The company plans to invest $26 billion between 2024 and 2028, and is expected to install advanced equipment and technology to strengthen and modernize its power transmission and distribution infrastructure. Enhanced transmission and renewable generation facilities should enable FE to transmit power even in adverse weather conditions.
Headwind
Electricity sales are generally seasonal businesses, and weather patterns can have a material impact on the results of FirstEnergy’s regulated electricity distribution segment. Electricity demand in our service areas historically peaks in the summer and winter. Mild weather conditions may reduce our electricity sales and, as a result, our revenue, revenue and cash flow.
Delays in the timely completion of capital projects could result in additional operating expenses and reduce the Company’s profitability.
price performance
Over the past six months, FirstEnergy stock has increased 5.7% compared to the industry’s growth of 5%.
Stocks to consider
Top stocks in the same industry include: DTE energy (DTE – free report), Pinnacle West Capital Corporation (New South Wales – free report) and Knee Source Co., Ltd. (N.I. – Free Report), each currently carrying a Zacks Rank #2 (Buy).You can see You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
DTE’s long-term (3-5 years) earnings growth rate is 6%. The Zacks Consensus Estimate for DTE’s 2024 earnings per share (EPS) indicates a 16.9% increase from the year-ago recorded figure.
PNW’s long-term earnings growth rate is 7.55%. The Zacks Consensus Estimate for 2024 EPS implies a 7.9% improvement from the bottom line recorded in 2023.
NiSource’s long-term earnings growth rate is 6%. The Zacks Consensus Estimate for 2024 EPS suggests an increase of 6.9% from the year-ago period.
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