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Trade-Ideas: FirstEnergy (FE) Is Today's Unusual Social Activity Stock

Stocks in this article: FE

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified FirstEnergy ( FE) as an unusual social activity candidate. In addition to specific proprietary factors, Trade-Ideas identified FirstEnergy as such a stock due to the following factors:

  • FE has 15x the normal benchmarked social activity for this time of the day compared to its average of 1.12 mentions/day.
  • FE has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $203.2 million.

Identifying stocks with 'Unusual Social Activity' tends to be a valuable process for traders looking to capitalize on the 'talk of the town' stocks that are basking in far more attention from the StockTwits financial community than normal. Good press? Bad press? It ultimately doesn't matter if it's good or bad if you know how to trade around the sentiment. Certain hedge funds use such data for their proprietary algorithms and it is not uncommon to see shared social sentiment play itself out in a stock's price trend.

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More details on FE:

FirstEnergy Corp., a diversified energy holding company, engages in the generation, transmission, and distribution of electricity in the United States. The company operates in Regulated Distribution, Regulated Transmission, and Competitive Energy Services segments. The stock currently has a dividend yield of 5.8%. FE has a PE ratio of 51.5. Currently there is 1 analyst that rates FirstEnergy a buy, no analysts rate it a sell, and 11 rate it a hold.

The average volume for FirstEnergy has been 3.3 million shares per day over the past 30 days. FirstEnergy has a market cap of $15.9 billion and is part of the utilities sector and utilities industry. Shares are down 8.7% year to date as of the close of trading on Monday.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12-months. Learn more.

TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates FirstEnergy as a hold. The company's strongest point has been its expanding profit margins. At the same time, however, we also find weaknesses including deteriorating net income, generally higher debt management risk and disappointing return on equity.

Highlights from the ratings report include:

  • FE, with its decline in revenue, underperformed when compared the industry average of 12.6%. Since the same quarter one year prior, revenues slightly dropped by 9.3%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • FIRSTENERGY CORP has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, FIRSTENERGY CORP reported lower earnings of $1.84 versus $2.13 in the prior year. This year, the market expects an improvement in earnings ($3.00 versus $1.84).
  • The gross profit margin for FIRSTENERGY CORP is currently lower than what is desirable, coming in at 27.42%. Regardless of FE's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, FE's net profit margin of -4.66% significantly underperformed when compared to the industry average.
  • Currently the debt-to-equity ratio of 1.61 is quite high overall and when compared to the industry average, suggesting that the current management of debt levels should be re-evaluated. Along with this, the company manages to maintain a quick ratio of 0.26, which clearly demonstrates the inability to cover short-term cash needs.
  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Electric Utilities industry and the overall market on the basis of return on equity, FIRSTENERGY CORP underperformed against that of the industry average and is significantly less than that of the S&P 500.

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