FIRSTENERGY CORP (FE): what the price requires

At today's price, FIRSTENERGY CORP (FE) is priced for -3.7% growth. boothcheck doesn't publish a fair value or a price target; it shows what the price assumes, so you can judge whether that bar is too high.

Generated: 2026-07-14 · Exported: 2026-07-16 · Source: https://boothcheck.com/report/FE

Headline

FieldValue
TickerFE
CompanyFIRSTENERGY CORP
Current price$48.46/sh
CompositionDistribution 50% / Integrated 38% / Stand-Alone Transmission 13% / Corporate/Other, Eliminations and Reconciling Adjustments 0%

What The Price Requires (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

FieldValue
Inversion basiswhole-company
Operating margin needed9.3%
Operating margin today19.7%
Margin compression implied-10.4pp
Implied growth-3.7%
Multiple paid10x operating income

The operating-margin requirement is derived from the framework's value band at year 12, a separately labeled basis from the headline growth/duration solve.

Solve inputs: computed at a 9.5% cost of capital with 4% terminal growth over a 5-year stage; each 1pp of cost of capital moves the implied operating-profit growth ~4.9pp.

How unusual the bet is: within-range

ReferenceValue
vs own history-0.10σ
cohort percentile (of 70 peers)6
implied end-window share0%

Valuation X-Ray

The price is justified by relative-multiple and growth-DCF; asset-based/earnings-power land below the price.

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

FamilyMedian price/FVModelsReads
Asset2.56x5expensive
Earnings2.04x3expensive
Relative0.72x5justifies
Growth0.62x4justifies

Families that justify the price: Relative, Growth Families that call it expensive: Asset, Earnings

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 9.7%); the inversion above states its own rate.

Per-Model Detail (n=17)

ModelFamilyFVPrice/FVApplicableMethodology
DCF Perpetual GrowthGrowth$102.410.47xyesReference only (OCF-based, capex excluded): OCF $3.2B
DCF Exit MultipleGrowth$0.00—noNegative/zero FCF or EBITDA — equity value floored at $0
Relative ValuationRelative$63.630.76xyesP/E 20x (static sector reference · 2026-04), scenarios: 16.5x / 20.0x / 23.5x (bear / base = reference held flat / bull), EV/EBITDA 13x
Simple DDMGrowth$230.490.21xyesDPS $1.77, g=8.4% (sustainable: ROE (TTM) × retention; not the terminal-growth assumption), ke=9.3%
Two-Stage DDMGrowth$62.860.77xyesStage 1: 20% for 5yr, Stage 2: 3.5% perpetual
Simple Excess ReturnAsset$19.852.44xyesBV/sh $21.82, ROE (TTM) 8.4%, ke 9.3%
Two-Stage Excess ReturnAsset$18.932.56xyes5yr excess ROE then converge to ke=9.3%
Discounted Future Market CapGrowth$38.251.27xyesRev $15.5B, growth 11% (input: historical growth; tapered), Terminal P/S: 1.5x / 1.8x / 2.1x (bear / base = today's held flat / bull, cap 8x)
Peter Lynch Fair ValueRelative$64.400.75xyesEPS $1.84, growth 35% (input: historical EPS growth), PEG=0.75 (Undervalued)
Margin TrajectoryGrowth——no—
Earnings Power ValueEarnings$23.742.04xyesNormalized EBIT (5y avg op income, one-time charges added back) $2.15B × (1−23%) / WACC 9.7% → EPV (no growth)
Residual IncomeAsset$18.782.58xyesBV $21.82 + 5yr PV of (ROE (TTM) 8.4% − Kₑ 9.3%) × BV; BV grows 5.5%/yr
Graham NumberAsset$30.051.61xyes√(22.5 × EPS $1.84 × BVPS $21.82) — Graham's conservative floor
EV/EBITDA RelativeRelative$86.460.56xyesEBITDA $3.95B × sector EV/EBITDA 13.0x
FCF YieldEarnings——no—
SBC-Adj FCF YieldEarnings——no—
Ben Graham FormulaEarnings$59.370.82xyesEPS $1.84 × (8.5 + 2×15.0%) × (4.4 / 5.3%)
ROIC-Justified P/BAsset$10.344.69xyesBV $21.82 × (ROIC 4.6% / WACC 9.7%)
P/Sales SectorRelative$66.930.72xyesRevenue $15.53B × sector P/S 2.5x
PEG Fair ValueRelative$69.000.70xyesEPS $1.84 × (PEG 1.5 × growth 25.0% (input: historical EPS growth)) → PE 37.5x
Earnings YieldEarnings$19.892.44xyesEPS $1.84 / required return 9.3% (Rf 4.3% + ERP 5.0%)
Funds From Operations MultipleRelative——no—
Clinical Phase NPVGrowth——no—
MertonAsset——no—
V5 Mechanical———no—

Solvency

FieldValue
Net debt$2.0b
Net debt / NOPAT (after-tax)0.84x
Net debt / operating income (pre-tax)0.65x
Interest coverage2.5x
Share count CAGR (dilution)0.4%
Burning cashno

Bullet Takeaways

At $46.45 FirstEnergy is priced at about 10x company-wide operating income, implying only about 1.3% operating growth a year, yet management guides to roughly 10% rate-base growth and a 6% to 8% long-term core EPS rate; that gap between a near-flat priced-in assumption and a high-single-digit guided plan is the bull case.

The growth is the regulated kind: a $36 billion Energize365 capital plan for 2026 to 2030, $6 billion of 2026 capex, 13% transmission rate-base growth, and Q1 2026 core EPS of $0.72 (up 7.5%) with reaffirmed 2026 guidance of $2.62 to $2.82; relative-multiple and growth-DCF frames justify the price while asset and earnings-power say expensive.

The risk is regulatory and financial: rate-case outcomes set the allowed returns the plan depends on (with FirstEnergy carrying past Ohio regulatory baggage), and interest coverage near 1.8x means funding the large capital program adds debt or dilutive equity, so per-share growth can lag rate-base growth.

Bull Case

Here is the counterintuitive part. At $46.45 (June 27, 2026) the price embeds company-wide operating growth of only about 1.3% a year for five years, yet FirstEnergy is guiding to roughly 10% annual rate-base growth and a long-term core EPS compound rate near the top end of 6% to 8%. The market is pricing a near-flat trajectory into a regulated utility that is telling investors it expects to compound earnings several times faster. That gap between a sub-2% priced-in assumption and a high-single-digit guided growth rate is the heart of the bull case: for a regulated utility, rate-base growth is unusually visible and bankable, so a price assuming almost none of it looks too cheap.

The growth is mechanical, not speculative, because of how utilities earn money. FirstEnergy invests capital in its distribution and transmission systems, regulators allow it to earn a set return on that invested capital, and the earnings base grows as the capital base grows. The company's filing describes transmission service and FERC rate orders that govern its billings (accession 0001031296-25-000006), the regulated machinery that converts capital spending into allowed returns. The Energize365 program is a $36 billion investment plan for 2026 to 2030 designed to support about 10% annual rate-base growth, and in the first quarter the company executed $1.4 billion of customer-focused capital investment, up 33%, with transmission rate base growing 13%.

The recent results back the guidance. First-quarter 2026 core earnings were $0.72 per share, up 7.5% from $0.67 a year earlier, and management reaffirmed 2026 core EPS guidance of $2.62 to $2.82. The relative-multiple and growth-DCF families both justify the price. The bull wager is straightforward: a regulated utility with a large, visible capital plan, a constructive transmission build-out, and reaffirmed high-single-digit growth, priced as if it will barely grow at all, is mispriced, and the dividend plus rate-base compounding does the work over time.

Bear Case

The bear case for FirstEnergy turns on the cost of funding all that growth and on who ultimately approves it. A utility's rate-base expansion is only as good as the regulatory outcomes that set its allowed returns, and the $36 billion Energize365 plan must be recovered through rate cases before public utility commissions and FERC. Regulators do not rubber-stamp; they can disallow spending, cut allowed returns on equity, or lengthen recovery timelines, especially when customer bills are rising and the political environment is hostile to rate increases. FirstEnergy in particular carries the legacy of a high-profile Ohio political and regulatory scandal, which makes its relationships with regulators a live risk rather than a formality. If rate cases land worse than the plan assumes, the bankable growth the bull counts on does not show up.

The financing is the more immediate worry. A $6 billion annual capital plan has to be funded, and the balance sheet is already stretched: interest coverage is only about 1.8x, a thin cushion that says a large share of operating profit is already going to service debt. Funding a multi-year, tens-of-billions capital program in a higher-rate environment means more debt at higher coupons, more equity issuance that dilutes existing holders, or both. Either way, the per-share growth lags the rate-base growth, and the thin coverage leaves little room if rates rise further or if any of the capital spending is disallowed.

The valuation already reflects two of the four frames pushing back. The relative-multiple and growth-DCF families justify the price, but the asset-based and earnings-power families say the stock is expensive. For a capital-intensive utility, the asset and earnings frames flagging expense is a meaningful signal: it says that on the productive capital base and current earning power, the price is full, and the bull case leans entirely on the regulated growth plan delivering. The price-to-earnings multiple sits in the lower half of the peer range, which the bull reads as cheapness but the bear reads as the market discounting FirstEnergy specifically for its regulatory baggage and leverage. The bear's summary: the visible growth is real but contingent on regulators and on financing it cheaply, and a utility with 1.8x interest coverage funding a massive capital plan into rate cases is more fragile than the steady-growth narrative implies.

Valuation

FirstEnergy is priced at about 10x company-wide operating income, which inverts to roughly 1.3% operating-income growth a year for five years at a 10.8% cost of capital. The inversion reads that as within range against the company's own history, and notes the peer multiple sits in the lower half of its range.

The method families split two against two. The relative-multiple and growth-DCF families justify the price, while the asset-based and earnings-power families say expensive. The bull leans on the peer and forward-growth frames, which credit the rate-base expansion; the bear leans on the asset and earnings frames, which say the price is full on current productive capital and earning power. For a utility, the swing factor is regulatory: the growth frame is right if rate cases deliver the allowed returns the plan assumes, and the asset and earnings frames are right if recovery falls short.

The honest read: this is a regulated-utility growth story priced as if it will barely grow, where the gap between a sub-2% implied rate and management's reaffirmed 6% to 8% core EPS guidance is the opportunity. The strengths are concrete: $0.72 core EPS in the first quarter (up 7.5%), 13% transmission rate-base growth, and a large, visible capital plan supporting about 10% rate-base growth. The risks are regulatory outcomes and a stretched balance sheet, with interest coverage near 1.8x. The cleaner way to weigh the price is against the rate-base growth trajectory and the financing cost of the capital plan, recognizing that the low implied growth already discounts the regulatory and leverage risk and would be beaten by even partial delivery of the guided plan.

Catalysts

The most recent catalyst was the first-quarter 2026 report, released late April 2026. FirstEnergy posted core earnings of $0.72 per share, up 7.5% from $0.67 a year earlier, with GAAP earnings of $0.70 per share on revenue of $4.2 billion. Management reaffirmed 2026 core EPS guidance of $2.62 to $2.82 and reaffirmed a long-term core EPS compound growth rate near the top end of 6% to 8% from 2026 to 2030 (FirstEnergy newsroom, StockTitan, PRNewswire).

The capital plan is the central forward driver. FirstEnergy maintained $6 billion of 2026 capital spending within a $36 billion Energize365 program for 2026 to 2030, expected to support about 10% annual rate-base growth. In the first quarter it executed $1.4 billion of customer-focused capital investment, up 33%, with transmission rate base growing 13% (a 19% increase at integrated businesses and 11% in the stand-alone segment); roughly 80% to 85% of the transmission capex targets existing-system investments (FirstEnergy 8-K, GuruFocus).

The forward catalysts are rate-case outcomes and the financing of the capital plan. The thesis turns on whether regulators approve the planned spending with constructive allowed returns and on whether FirstEnergy funds the program without excessive dilution or rising interest cost, given thin interest coverage. Favorable rate orders and on-plan rate-base growth would support the case that the stock is priced too conservatively; adverse regulatory decisions, higher financing costs, or a need for more equity issuance would be the clearest near-term risks. The next quarterly print and any rate-case rulings are the things to watch (GuruFocus, FirstEnergy newsroom).

Peer Cohorts (Per Segment, With Filing Citations)

Distribution (reported)

Integrated (reported)

Stand-Alone Transmission (reported)

Methodology Note

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.

View the full interactive FE report on boothcheck