Breaking Down FirstEnergy Corp. (FE) Financial Health: Key Insights for Investors

Are you keeping a close watch on your investments? Ever wonder how utilities giants measure up financially? Let's dive into FirstEnergy Corp.'s (FE) financial health, dissecting key figures from their 2024 fiscal year to give you a clearer picture. With a reported revenue of $13.5 billion and GAAP earnings from continuing operations of $978 million, how does this compare to previous years, and what does it mean for investors like you?

FirstEnergy Corp. (FE) Revenue Analysis

To evaluate the financial health of FirstEnergy Corp. (FE), it's crucial to understand the composition and trends in its revenue streams. A detailed look into where the company's money comes from, how these sources have changed over time, and the factors influencing these changes provides valuable insights for investors.

FirstEnergy Corp.'s revenue is primarily derived from the distribution, transmission, and generation of electricity. Here’s a breakdown:

• Distribution: This segment involves delivering electricity to end-users through a network of local distribution lines. It is a significant and stable revenue source, driven by customer demand and regulatory frameworks.
• Transmission: This includes the high-voltage transmission network that moves electricity from generating stations to distribution substations. Revenues here are often governed by long-term contracts and regulated rates.
• Generation: Although FirstEnergy has been moving away from direct electricity generation, divesting many of its generating assets, understanding the contribution from remaining generation facilities is still relevant.

Analyzing year-over-year revenue growth rates provides a view of FirstEnergy's performance and trajectory. Factors influencing these rates include:

• Weather Conditions: Extreme temperatures (both hot and cold) can significantly increase electricity demand, driving up revenues.
• Economic Activity: Economic growth in FirstEnergy's service territories typically leads to higher electricity consumption by businesses and households.
• Regulatory Changes: Changes in regulations regarding rates, renewable energy mandates, and environmental standards can impact revenue.
• Energy Efficiency Programs: Initiatives promoting energy conservation can reduce electricity consumption, potentially affecting revenue.

To illustrate, let's consider how different business segments contribute to FirstEnergy's overall revenue. (Note: Actual percentages may vary based on the reporting period.)

Significant changes in FirstEnergy’s revenue streams have occurred due to strategic shifts in the energy market. One notable change is the company's move away from electricity generation to focus on its regulated transmission and distribution businesses. This transition has involved:

• Divestiture of Generating Assets: Selling off power plants to reduce exposure to volatile energy markets and environmental regulations.
• Investments in Infrastructure: Upgrading and expanding transmission and distribution networks to improve reliability and efficiency.
• Focus on Regulated Revenue: Shifting towards revenue streams that are more predictable and stable due to regulatory oversight.

For further insights into FirstEnergy Corp. and its investors, check out: Exploring FirstEnergy Corp. (FE) Investor Profile: Who’s Buying and Why?

FirstEnergy Corp. (FE) Profitability Metrics

A close examination of FirstEnergy Corp.'s financial performance reveals key insights into its profitability. By analyzing gross profit, operating profit, and net profit margins, trends in profitability over time, comparison of profitability ratios with industry averages, and operational efficiency, a comprehensive understanding of the company's financial health can be achieved. Additionally, improving operational efficiency and managing costs are essential for margin improvement.

Here's a detailed breakdown:

• Gross Profit: In 2024, FirstEnergy reported a gross profit of $9.1 billion.
• Revenue: The company's revenue for 2024 reached $13.5 billion.

The latest twelve months gross profit margin is 70.2%. FirstEnergy's gross profit margin for fiscal years ending December 2020 to 2024 averaged 69.1%.

Looking back at the last 5 years:

• FirstEnergy's gross profit margin peaked in December 2020 at 73.3%.
• FirstEnergy's gross profit margin hit its 5-year low in December 2023 of 66.9%.

FirstEnergy's gross profit margin:

• Decreased in 2021 (67.8%, -7.5%).
• Decreased in 2022 (67.1%, -1.0%).
• Decreased in 2023 (66.9%, -0.3%).
• Increased in 2020 (73.3%, +3.3%).
• Increased in 2024 (70.2%, +5.0%).

FirstEnergy Gross Profit Margin Benchmarks compared to similar companies:

The company's current Operating Margin is 11.16%. At the end of 2024 the company had an Operating Margin of 11.16%.

Operating Margin history for FirstEnergy from 2001 to 2024:

FirstEnergy average operating margin for 2023 was 15.97%, a 4.58% increase from 2022. FirstEnergy average operating margin for 2022 was 15.27%, a 14.21% increase from 2021. FirstEnergy average operating margin for 2021 was 17.8%, a 16.86% decline from 2020.

FirstEnergy Net Income:

• FirstEnergy annual net income for 2024 was $0.978B, a 11.25% decline from 2023.
• FirstEnergy annual net income for 2023 was $1.102B, a 171.43% increase from 2022.
• FirstEnergy annual net income for 2022 was $0.406B, a 68.36% decline from 2021.

FirstEnergy average net profit margin for 2023 was 4.85%, a 46.47% increase from 2022.

FirstEnergy average net profit margin for 2022 was 9.06%, a 17.41% decline from 2021.

FirstEnergy average net profit margin for 2021 was 10.97%, a 51.31% decline from 2020.

Explore more about FirstEnergy Corp. investors: Exploring FirstEnergy Corp. (FE) Investor Profile: Who’s Buying and Why?

FirstEnergy Corp. (FE) Debt vs. Equity Structure

Understanding FirstEnergy Corp.'s financial health requires a close look at its debt and equity structure. This involves analyzing the company's debt levels, debt-to-equity ratio, recent financing activities, and how it balances debt and equity to fund its operations and growth.

Here's a breakdown of FirstEnergy Corp.'s debt versus equity:

• Overview of Debt Levels

As of December 31, 2024:

• Long-term debt: $22.496 billion, a 1.7% decrease from 2023.
• Short-term debt: $550 million.

• Debt-to-Equity Ratio

The debt-to-equity ratio is a key metric for assessing financial leverage. For FirstEnergy:

• The debt-to-equity ratio for the quarter ending December 31, 2024, was 1.64.
• The average debt-to-equity ratio for 2023 was 2.08, a 1.96% decrease from 2022.

This ratio is calculated by dividing long-term debt by stockholders' equity, indicating the extent to which the company is финансируется by debt rather than equity.

• Recent Debt Issuances, Credit Ratings, or Refinancing Activity

Recent activities and ratings include:

• S&P Global Ratings Upgrade: In April 2024, S&P upgraded FirstEnergy's credit rating to 'BBB' from 'BBB-'. This reflects expectations that the company's credit measures will improve following the sale of a 30% minority interest in FirstEnergy Transmission LLC (FET) to Brookfield Super-Core Infrastructure Partners for $3.5 billion. S&P anticipates that FirstEnergy's funds from operations (FFO) to debt will consistently exceed 12%.
• Moody's Upgrade: In March 2024, Moody's upgraded FirstEnergy's senior unsecured rating to Baa3 from Ba1.
• Debt Issuance: During the fourth quarter of 2024, FirstEnergy issued $700 million in debt securities with registration rights at JCP and L, with a coupon of 5.1%.
• Debt Redemption: FirstEnergy redeemed $460 million in debt at FE HoldCo as part of its plan to use proceeds from the FET minority stake sale.
• Strategic Equity Financing: Since late 2021, FirstEnergy has completed approximately $7 billion in strategic equity financings at an equivalent share price of $87 per share.

• Balancing Debt Financing and Equity Funding

FirstEnergy Corp. strategically manages its debt and equity to maintain a strong financial foundation. Recent actions demonstrate this balance:

• Sale of FET Stake: The sale of a 30% stake in FirstEnergy Transmission LLC for $3.5 billion to Brookfield Super-Core Infrastructure Partners. The initial proceeds of $2.3 billion were received, with the remaining $1.2 billion in interest-bearing notes extinguished in July 2024.
• Energize365 Program: FirstEnergy is deploying these proceeds to strengthen its balance sheet and support its five-year, $26 billion Energize365 grid investment program. In 2024, FirstEnergy invested $4.5 billion in its system through Energize365 and expects to invest $5.0 billion in 2025. The company is extending Energize365 through 2029 with a base investment plan of $28 billion.
• Credit-Supportive Measures: Proceeds from the FET sale are expected to improve FirstEnergy's consolidated funds from operations (FFO) to debt to consistently above 12%.

These strategic moves aim to improve credit metrics, maintain investment-grade ratings, and support long-term growth. For example, the company’s shareholder equity is $13.7 billion while the total debt is $24.0 billion, resulting in a debt-to-equity ratio of 175%.

See also: Mission Statement, Vision, & Core Values of FirstEnergy Corp. (FE).

FirstEnergy Corp. (FE) Liquidity and Solvency

Analyzing FirstEnergy Corp.'s financial health involves a close look at its liquidity and solvency, which reveals its ability to meet short-term obligations and long-term financial stability. This assessment is crucial for investors seeking to understand the company's risk profile and potential for sustainable growth. Here's a breakdown of key liquidity metrics and cash flow trends for FirstEnergy Corp., based on the latest available data.

Assessing FirstEnergy Corp.'s Liquidity:

Liquidity ratios provide insights into a company's ability to cover its short-term liabilities with its short-term assets. Key ratios to consider include the current ratio and the quick ratio.

• Current Ratio: The current ratio is calculated by dividing current assets by current liabilities. A ratio above 1 indicates that a company has more current assets than current liabilities, suggesting good liquidity.
• Quick Ratio: The quick ratio, also known as the acid-test ratio, excludes inventory from current assets, as inventory may not be easily convertible to cash. It is calculated as (Current Assets - Inventory) / Current Liabilities. A quick ratio closer to 1 is generally preferred.

For the fiscal year 2024, FirstEnergy Corp. reported a current ratio of 1.01, and a quick ratio of 0.62. These figures suggest that while FirstEnergy can cover its short-term liabilities with its current assets, its immediate liquidity, excluding inventories, is somewhat constrained. However, these ratios should be assessed in the context of the utility industry, where stable and predictable cash flows can support lower liquidity ratios.

Analysis of Working Capital Trends:

Working capital, defined as current assets minus current liabilities, is a measure of a company's short-term financial health. Monitoring the trends in working capital can reveal whether a company is becoming more or less efficient in managing its short-term resources.

As of fiscal year 2024, FirstEnergy Corp. had a working capital of $145 million. Monitoring the trend in working capital is essential. An increasing working capital usually indicates improved liquidity, while a decreasing one may signal potential challenges in meeting short-term obligations.

Cash Flow Statements Overview:

The cash flow statement provides a comprehensive view of all cash inflows and outflows during a specific period, categorized into operating, investing, and financing activities.

• Operating Cash Flow: Cash generated from the company's core business activities.
• Investing Cash Flow: Cash used for investments in assets, such as property, plant, and equipment (PP&E).
• Financing Cash Flow: Cash flow related to debt, equity, and dividends.

Here's a look at FirstEnergy Corp.'s cash flow trends for the fiscal year 2024:

FirstEnergy Corp.'s operating cash flow of $2,874 million indicates a strong ability to generate cash from its core operations. The negative investing cash flow of $1,793 million reflects investments in infrastructure and other assets, which is typical for a utility company. The negative financing cash flow of $957 million suggests that the company is actively managing its debt and equity, potentially through repayments or share buybacks.

Potential Liquidity Concerns or Strengths:

FirstEnergy Corp. exhibits several liquidity strengths. A robust operating cash flow provides a solid foundation for meeting its obligations and investing in future growth. However, the relatively low quick ratio may warrant attention. Investors should monitor how the company manages its working capital and ensures it can meet its immediate liabilities without relying heavily on inventory liquidation.

Understanding a company's mission, vision, and core values can provide additional context for evaluating its long-term strategy and financial health. For more insights, consider exploring: Mission Statement, Vision, & Core Values of FirstEnergy Corp. (FE).

FirstEnergy Corp. (FE) Valuation Analysis

Determining whether FirstEnergy Corp. (FE) is overvalued or undervalued requires analyzing several key financial metrics and market indicators. These include price-to-earnings (P/E), price-to-book (P/B), and enterprise value-to-EBITDA (EV/EBITDA) ratios, alongside stock price trends, dividend yield, payout ratios, and analyst consensus.

Currently, detailed real-time data for these specific valuation metrics as of late April 2025 is not available. However, examining historical data and trends up to the end of the 2024 fiscal year can provide a useful perspective:

• Price-to-Earnings (P/E) Ratio: The P/E ratio indicates how much investors are willing to pay for each dollar of FirstEnergy's earnings. A higher P/E ratio might suggest overvaluation if it's significantly above the industry average, whereas a lower P/E could indicate undervaluation.
• Price-to-Book (P/B) Ratio: The P/B ratio compares a company's market capitalization to its book value of equity. It can help determine whether the stock price reflects the company's net asset value accurately.
• Enterprise Value-to-EBITDA (EV/EBITDA): This ratio compares the company's total value (market cap plus debt minus cash) to its earnings before interest, taxes, depreciation, and amortization. It's useful for evaluating companies with different capital structures.

To assess FirstEnergy's valuation, consider these points:

• Stock Price Trends: Reviewing the stock price movement over the past 12 months, or longer, shows investor sentiment and market confidence. Significant price appreciation might suggest overvaluation, while a decline could indicate undervaluation.
• Dividend Yield and Payout Ratios: If FirstEnergy pays dividends, the dividend yield (annual dividend per share divided by price per share) indicates the return on investment from dividends alone. The payout ratio (percentage of earnings paid out as dividends) shows the sustainability of dividend payments.
• Analyst Consensus: Check what analysts recommend (buy, hold, or sell). These ratings often reflect collective insights into the stock's potential valuation.

For instance, if FirstEnergy's P/E ratio is substantially higher than its peers in the utilities sector, and the stock price has seen rapid growth without commensurate earnings increases, it might be considered overvalued. Conversely, if the P/B ratio is below 1.0 and analysts rate the stock as a strong buy, it could signal undervaluation.

Keep in mind that these metrics should be compared against industry averages and FirstEnergy’s historical data to provide a comprehensive valuation analysis. You can find more details in our comprehensive analysis: Breaking Down FirstEnergy Corp. (FE) Financial Health: Key Insights for Investors

FirstEnergy Corp. (FE) Risk Factors

FirstEnergy Corp. (FE) faces a variety of internal and external risks that could significantly impact its financial health. These risks span industry competition, regulatory changes, market conditions, and specific operational and strategic challenges detailed in their financial reports.

Here's a breakdown of key risk areas:

• Industry Competition: The energy sector is highly competitive. FirstEnergy faces competition from other utilities, energy service companies, and alternative energy providers. This competition can pressure prices and reduce market share.
• Regulatory Changes: The energy industry is heavily regulated. Changes in laws, regulations, or policies at the federal, state, and local levels can impact FirstEnergy’s operations, costs, and profitability. For example, environmental regulations, mandates for renewable energy, and changes in rate structures can all have significant financial implications.
• Market Conditions: Economic downturns, fluctuations in energy prices, and changes in customer demand can affect FirstEnergy’s revenue and profitability. For instance, a decrease in industrial activity can reduce electricity demand, impacting sales.

Operational, financial, and strategic risks, as highlighted in recent earnings reports and filings, include:

• Operational Risks: These include risks related to the operation of FirstEnergy’s transmission and distribution systems. Equipment failures, cyber-attacks, and natural disasters can disrupt service, increase costs, and damage the company’s reputation.
• Financial Risks: These involve risks related to FirstEnergy’s financial structure, including debt levels, access to capital, and credit ratings. Maintaining financial stability is crucial for funding operations and investments.
• Strategic Risks: These encompass risks associated with FirstEnergy’s strategic decisions, such as investments in new infrastructure, acquisitions, and divestitures. Poor strategic choices can lead to financial losses and missed opportunities.

Mitigation strategies and plans that FirstEnergy may employ to address these risks could include:

• Investments in Infrastructure: Upgrading and maintaining transmission and distribution systems to reduce the risk of outages and improve reliability.
• Cybersecurity Measures: Implementing robust cybersecurity protocols to protect against cyber-attacks and data breaches.
• Financial Planning: Maintaining a strong balance sheet, managing debt levels, and diversifying funding sources to ensure financial stability.
• Strategic Planning: Conducting thorough risk assessments and developing contingency plans to address potential challenges.

Understanding these risks and mitigation strategies is crucial for investors assessing FirstEnergy’s long-term financial health and stability. For further insights into FirstEnergy's core principles, explore: Mission Statement, Vision, & Core Values of FirstEnergy Corp. (FE).

FirstEnergy Corp. (FE) Growth Opportunities

FirstEnergy Corp. (FE) is navigating the evolving energy landscape with a focus on strategic investments and operational improvements. The company's future growth prospects are influenced by several key factors, including infrastructure development, technological advancements, and regulatory changes.

Key growth drivers for FirstEnergy include:

• Grid Modernization: FirstEnergy is committed to strengthening its infrastructure through the Energize365 program, with planned capital investments of $28 billion from 2025 through 2029. These investments aim to improve grid reliability and support the energy transition.
• Renewable Energy Investments: The company is expanding its solar generation capacity, particularly in West Virginia, with projects expected to add 26 MWs of capacity.
• Strategic Partnerships: FirstEnergy is involved in joint proposals for regional electric transmission projects, including a $3 billion investment for Valley Link, in collaboration with VEPCO and Transource Energy, LLC.

Future revenue growth projections and earnings estimates include:

• Core Earnings Growth: FirstEnergy is targeting a 6-8% compounded annual growth rate for core earnings through its five-year planning period.
• 2025 Core Earnings Guidance: The company introduced a 2025 core earnings guidance range of $2.40 to $2.60 per share.
• Capital Investment Increase: Projected annual capital investment is expected to increase from $5 billion in 2025 to $6.4 billion by 2029.

Strategic initiatives and partnerships driving future growth are:

• Energize365 Program: This capital investment strategy focuses on strengthening the grid and enabling the energy transition. From 2025 through 2029, FirstEnergy plans to invest approximately $28 billion in system-wide capital investments.
• Regulatory Support: FirstEnergy has completed rate reviews in four of its five states, de-risking 83% of its rate base, which supports a stable financial outlook.
• Debt Reduction Strategy: The company aims to continue its debt reduction strategy and explore new opportunities for capital investment, focusing on sustainable growth initiatives.

FirstEnergy's competitive advantages that position the company for growth are:

• Integrated Operational Approach: This approach, combined with a focus on technological advancements and infrastructure resilience, positions FirstEnergy as a reliable and trusted utility provider.
• Strong Customer Relationships: The company has a strong presence in the energy market and is dedicated to safety, reliability, and operational excellence.
• Extensive Infrastructure: FirstEnergy operates an electric transmission system spanning approximately 24,500 circuit miles across six states.

Financial performance highlights for 2024 include:

These strategic actions and financial results reflect FirstEnergy's commitment to sustainable growth and enhanced service delivery in the evolving energy sector. Furthermore, FirstEnergy offers an attractive forward dividend yield. The company has a history of dividend increases, providing a steady income stream for investors.

Read more about FirstEnergy Corp. (FE) investor profile: Exploring FirstEnergy Corp. (FE) Investor Profile: Who’s Buying and Why?