Financial Analysis: FirstEnergy (FE) versus Its Peers

FirstEnergy (NYSE:FE) is one of 103 public companies in the “Electric Utilities” industry, but how does it compare to its competitors? We will compare FirstEnergy to similar businesses based on the strength of its institutional ownership, risk, profitability, dividends, analyst recommendations, valuation and earnings.

Dividends

FirstEnergy pays an annual dividend of $1.86 per share and has a dividend yield of 4.0%. FirstEnergy pays out 89.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. As a group, “Electric Utilities” companies pay a dividend yield of 3.1% and pay out 64.0% of their earnings in the form of a dividend. FirstEnergy has increased its dividend for 3 consecutive years.

Volatility and Risk

FirstEnergy has a beta of 0.39, indicating that its share price is 61% less volatile than the S&P 500. Comparatively, FirstEnergy’s competitors have a beta of -2.37, indicating that their average share price is 337% less volatile than the S&P 500.

Valuation & Earnings

This table compares FirstEnergy and its competitors top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Net Income	Price/Earnings Ratio
FirstEnergy	$15.09 billion	$1.02 billion	22.37
FirstEnergy Competitors	$14.47 billion	$1.54 billion	20.17

FirstEnergy has higher revenue, but lower earnings than its competitors. FirstEnergy is trading at a higher price-to-earnings ratio than its competitors, indicating that it is currently more expensive than other companies in its industry.

Analyst Recommendations

This is a summary of current recommendations and price targets for FirstEnergy and its competitors, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
FirstEnergy	0	4	8	0	2.67
FirstEnergy Competitors	1426	6543	5520	139	2.32

FirstEnergy currently has a consensus target price of $50.77, indicating a potential upside of 9.12%. As a group, “Electric Utilities” companies have a potential upside of 3.92%. Given FirstEnergy’s stronger consensus rating and higher probable upside, research analysts clearly believe FirstEnergy is more favorable than its competitors.

Profitability

This table compares FirstEnergy and its competitors’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
FirstEnergy	7.40%	11.07%	2.73%
FirstEnergy Competitors	14.26%	9.78%	3.23%

Institutional & Insider Ownership

89.4% of FirstEnergy shares are held by institutional investors. Comparatively, 60.0% of shares of all “Electric Utilities” companies are held by institutional investors. 0.1% of FirstEnergy shares are held by insiders. Comparatively, 6.2% of shares of all “Electric Utilities” companies are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Summary

FirstEnergy beats its competitors on 9 of the 15 factors compared.

FirstEnergy Company Profile

FirstEnergy Corp. is an investor-owned electric utility holding company focused primarily on regulated electricity transmission and distribution. Through its utility subsidiaries, it delivers electricity to residential, commercial and industrial customers across parts of Ohio, Pennsylvania, New Jersey, West Virginia and Maryland. The company’s operations include maintaining local electric distribution networks and owning and operating high-voltage transmission infrastructure across portions of the Midwest and Mid-Atlantic.