Why FirstEnergy (FE) Stock Is Soaring Today

NEW YORK (TheStreet) -- Shares of FirstEnergy Corp. (FE) are higher by 5.42% to $33.19 on Tuesday afternoon as the utility market receives a boost from a positive pricing outlook, which is tied to a recent auction to produce power supplies in Washington, DC and 13 other states, Investors.com reported.

PJM Interconnection, a company that runs the largest power grid in the U.S., held its annual auction on Friday and the grid secured 167,004 megawatts of power supplies.

Based on the results of the annual auction payments to electricity producers will increase to $120 per megawatt per day from $59.37 for the previous year.

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Other utility companies that saw gains on Tuesday include PPL Corp. (PPL), up 2.89%, American Electrical Power (AEP), higher by 2.41%, and Exelon (EXC) which is up 3.82%.

TheStreet Ratings team rates FIRSTENERGY CORP as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:

"We rate FIRSTENERGY CORP (FE) a HOLD. The primary factors that have impacted our rating are mixed some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth and increase in net income. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk, disappointing return on equity and poor profit margins."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • FE's revenue growth has slightly outpaced the industry average of 9.4%. Since the same quarter one year prior, revenues rose by 12.5%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • The net income growth from the same quarter one year ago has exceeded that of the Electric Utilities industry average, but is less than that of the S&P 500. The net income increased by 6.1% when compared to the same quarter one year prior, going from $196.00 million to $208.00 million.
  • FIRSTENERGY CORP's earnings per share declined by 37.0% in the most recent quarter compared to 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 $0.90 versus $1.80 in the prior year. This year, the market expects an improvement in earnings ($2.49 versus $0.90).
  • The gross profit margin for FIRSTENERGY CORP is rather low; currently it is at 16.69%. It has decreased significantly from the same period last year. Along with this, the net profit margin of 4.96% trails that of the industry average.
  • Net operating cash flow has significantly decreased to -$92.00 million or 284.00% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • You can view the full analysis from the report here: FE Ratings Report
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