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FirstEnergy (FE) Down 5.6% Since Last Earnings Report: Can It Rebound?

Zacks Equity Research

It has been about a month since the last earnings report for FirstEnergy (FE). Shares have lost about 5.6% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is FirstEnergy due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

FirstEnergy's Q1 Earnings Beat Estimates, Revenues Miss

FirstEnergy delivered first-quarter 2020 operating earnings of 66 cents per share, which beat the Zacks Consensus Estimate of 64 cents by 3.13%. Quarterly earnings dropped by a penny from the year-ago quarter’s figure.

On a GAAP basis, the company’s earnings amounted to 14 cents compared with the earnings of 59 cents in the prior-year quarter.

Total Revenues

FirstEnergy generated total revenues of $2,709 million in first-quarter 2020, which missed the Zacks Consensus Estimate of $2,916 million by 7.08%. The figure declined from $2,883 million in the year-ago quarter.

Highlights of the Release

Residential sales fell 12.6% on a year-over-year basis. Commercial deliveries declined 7.5% and industrial sales fell 3% year over year. Total distribution deliveries declined 7.8% from prior-year quarter’s levels due to milder-than-expected temperatures as well as lower usage.

Total operating expenses in the quarter under review amounted to $ 2,177 million, down 3.4% from $2,254 million in the prior-year quarter.

In the first quarter, operating income was $532 million, down 15.4 from $629 million in the year-ago quarter.

Financial Update

FirstEnergy had cash and cash equivalents of $152 million as of Mar 31, 2020 compared with $627 million on Dec 31, 2019.

Long-term debt and other long-term obligations as of Mar 31, 2020 was $20,821 million, up from $19,618 million on Dec 31, 2019.

Net Cash used in operating activities in first-quarter 2020 was $560 million compared with $182 million in the prior-year quarter.

Guidance

Management reaffirmed 2020 earnings per share guidance in the range of $2.40-$2.60, whose mid-point of $2.50 is in line with the current Zacks Consensus Estimate.

 

How Have Estimates Been Moving Since Then?

Analysts were quiet during the last two month period as none of them issued any earnings estimate revisions.

VGM Scores

At this time, FirstEnergy has a poor Growth Score of F, however its Momentum Score is doing a bit better with a D. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

FirstEnergy has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.



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