FirstEnergy Corporation‘s FE continuous capital investments to maintain and increase resiliency are likely to strengthen its infrastructure, which will help enhance its performance. Given its growth opportunities, FE makes for a solid investment option in the Utility sector.

Currently, the company carries a Zacks Rank #2 (Buy). Let’s look at the factors that are driving the stock.

FE’s Growth Projections & Surprise History

The Zacks Consensus Estimate for FE’s 2024 earnings per share is pinned at $2.70, which indicates year-over-year growth of 5.5%.

The consensus estimate for 2024 sales is pinned at $13.78 billion, which indicates year-over-year growth of 7.1%.

The company’s long-term (three to five years) earnings growth rate is 7%.

FE has a positive earnings surprise history. Its trailing four-quarter earnings surprise is 2.66%, on average.

FE’s Dividend Yield

FirstEnergy has been rewarding its shareholders with dividend payments at regular intervals. The company’s board of directors approved a new dividend policy in February 2023 that increased the target payout ratio to 60-70% from 55-65% previously. Its current dividend yield is 3.86%, better than the Zacks S&P 500 composite’s average yield of 1.24%.

FE’s Return on Equity

FirstEnergy’s current return on equity (ROE) is 12.12%, which is more than the industry average of 10.42%. ROE, a profitable measure, reflects how effectively a company is utilizing its shareholders’ funds in its operations to generate income.

FE’s Solvency

The time-to-interest earned ratio at the end of the second quarter was 2.11. The ratio, being greater than one, reflects the company’s ability to meet future interest obligations without difficulties.

Strategic Investments of FirstEnergy

FirstEnergy’s strategic investment will help serve its 6 million customers more efficiently. The company’s “Energize365” is a multi-year grid evolution platform that is focused on enhancing the customer experience while maintaining affordability.

With planned investments of $26 billion between 2024 and 2028, FE plans to install advanced equipment and technologies that will strengthen and modernize its transmission and distribution infrastructure. Strengthening the transmission and renewable generation assets will allow it to transmit electricity even during adverse weather conditions.

FE Stock’s Price Performance

Shares of FirstEnergy have gained 23.4% in the year-to-date period compared with the industry’s 22.7% growth.

Image Source: Zacks Investment Research

Other Stocks to Consider

Some other top-ranked stocks in the industry are NiSource Inc. NI, IDACORP, Inc. IDA and Edison International EIX. Each of these stocks currently carries a Zacks Rank of 2.

NiSource delivered an average earnings surprise of 20.64% in the last four quarters. The Zacks Consensus Estimate for NI’s 2025 sales indicates year-over-year growth of 12.1%.

IDACORP delivered an average earnings surprise of 10.35% in the last four quarters. The consensus estimate for IDA’s 2024 sales indicates year-over-year growth of 3.8%.

Edison International delivered an average earnings surprise of 4.13% in the last four quarters. The Zacks Consensus Estimate for EIX’s 2024 sales indicates year-over-year growth of 2.9%.

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