FirstEnergy's (FE) Systematic Long-Term Investments Bode Well

FirstEnergy Corporation (NYSE:FE) is set to strengthen its operations on the back of the Energizing the Future. We recently issued an updated research report on the company.

For 2019, earnings estimates FirstEnergy were unchanged at $2.50 per share in the past 30 days, while the same for 2020 has moved up 0.8% to $2.46 in the said period.

Additionally, the company delivered average four-quarter positive earnings surprise of 4.24%.

What’s Driving the Stock?

FirstEnergy’s efforts to expand its regulated generation mix have stabilized its earnings trajectory. In the past few years, the company has successfully expanded its regulated operations and completed the transition to become a fully-regulated utility company. FirstEnergy affirmed its long-term compound annual operating earnings growth projection in the range of 6-8% from 2018 through 2021.

The company aims to spend $6.2-$6.7 billion to strengthen its distribution network in the 2018-2021 time period. Based on this capital plan, the company expects Regulated Distribution’s rate base to grow approximately 5% from 2018 through 2021.

The modernization drive will boost the company’s service reliability, which will lead to customer retention. This enabled the company to create the “Energizing the Future” plan that is aimed toward the upgrade and expansion of its regulated transmission capabilities. Currently, the company expects to bring 600-700 projects in service during the current year. Under this initiative, the company has plans to invest $4.8 billion in capital from 2018 to 2021 on Regulated Transmission operations.

However, the risk of unplanned outages of facilities, regulations and unexpected delay in completion of the ongoing capital project is likely to exert pressure on the bottom line.

Zacks Rank & Price Performance

The stock carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Year to date, shares of the company have rallied 21.2% compared with the industry’’s growth of 15.2%.

Other Stocks to Consider

Some other top-ranked stocks from the same industry are The AES Corporation (NYSE:AES) , IDACORP, Inc (NYSE:IDA) and Alliant Energy Corporation (NASDAQ:LNT) . All the three stocks hold a Zacks Rank #2.

Long-term earnings growth of AES Corporation, IDACORP and Alliant Energy is pegged at 8.49%, 3.80% and 5.50%, respectively.

The Zacks Consensus Estimate for 2019 earnings of AES Corporation, IDACORP and Alliant Energy inched up 0.7%, 0.2% and 0.4% to $ 1.34, $4.47, $2.25 in the past 60 days, respectively.

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