FIRSTENERGY CORP (FE) Stock Analysis
FIRSTENERGY CORP (FE) Stock Analysis
Overall Grade: F (Concerning)
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FIRSTENERGY CORP faces challenges in financial performance that warrant careful analysis.
Key Metrics:
| Metric | Value | Context |
|---|---|---|
| ROIC | 4.8% | Below expectations |
| FCF Margin | -6.7% | Cash flow pressure |
| Debt/Equity | 2.1x | Elevated debt |
Investment Thesis: Financial metrics indicate concerning business quality with areas requiring attention.
What is FIRSTENERGY CORP's Profitability and ROIC?
FIRSTENERGY CORP's return on invested capital of 4.8% is below the typical cost of capital. Gross margin of 72.7% with operating margin at 14.6% reflects the company's strong market position.
Key Metrics
| Metric | Value | Rating | Interpretation |
|---|---|---|---|
| Return on Invested Capital (ROIC) | 4.8% | Warning | Below cost of capital |
| Return on Equity (ROE) | 8.0% | Adequate | Moderate equity returns |
| Gross Margin | 72.7% | Excellent | Strong pricing power |
| Operating Margin | 14.6% | Good | Moderate operational efficiency |
How Strong is FIRSTENERGY CORP's Cash Flow Quality?
FIRSTENERGY CORP generated $-1.0B in free cash flow over the trailing twelve months, representing a -6.7% margin. Cash earnings quality is strong, with operating cash flow exceeding net income by 3.6x.
Key Metrics
| Metric | Value | Rating | Interpretation |
|---|---|---|---|
| Free Cash Flow Margin | -6.7% | Red flag | Thin cash margins |
| Free Cash Flow (TTM) | $-1.0B | Red flag | Cash burn |
| OCF/Net Income | 3.6x | Excellent | High earnings quality |
| FCF Consistency (8Q) | N/A | Warning | Variable cash flow |
What is FIRSTENERGY CORP's Financial Health?
FIRSTENERGY CORP's debt-to-equity ratio of 2.1x indicates elevated leverage.
Key Metrics
| Metric | Value | Rating | Interpretation |
|---|---|---|---|
| Debt to Equity | 2.1x | Warning | Elevated leverage |
| Net Cash Position | $-26.5B | Warning | Net debt position |
Is FIRSTENERGY CORP Stock Overvalued or Undervalued?
FIRSTENERGY CORP trades at a P/E of 25.4x, representing a premium to the sector median of N/A. Free cash flow yield of -3.9% reflects market expectations for growth.
Key Metrics
| Metric | Value | Rating | Interpretation |
|---|---|---|---|
| P/E Ratio | 25.4x | Adequate | Premium valuation |
| EV/Sales | 3.3x | Good | Growth premium priced in |
| FCF Yield | -3.9% | Warning | Lower cash yield |
| Dividend Yield | 4.0% | Adequate | Meaningful income |
Sector Rankings
| Metric | Value | Percentile | vs Median |
|---|---|---|---|
| Return on Invested Capital (ROIC) | 4.8% | Bottom 50% | 0.8x below |
| Free Cash Flow Margin | -6.7% | Bottom 50% | - |
| Gross Margin | 72.7% | Top 50% | 1.1x above |
| Operating Margin | 14.6% | Bottom 25% | 0.7x below |
| Return on Equity (ROE) | 8.0% | Bottom 50% | 0.8x below |
| P/E Ratio | 25.4x | N/A | - |
Rating Thresholds
Return on Invested Capital (ROIC)
Measures how efficiently a company uses its debt and equity capital to generate profits. ROIC above 15% typically indicates a competitive moat.
| Rating | Range | Interpretation |
|---|---|---|
| Excellent | > 20% | Exceptional capital efficiency, strong competitive moat |
| Good | 12% - 20% | Above-average returns, sustainable competitive position |
| Adequate | 8% - 12% | Around cost of capital, moderate competitive position |
| Warning | 4% - 8% | Below cost of capital, value may be eroding |
| Red flag | < 4% | Significant capital destruction, fundamental issues |
Current: 4.8% (Warning - Bottom 50% of sector (median: 5.9%))
Free Cash Flow Margin
The percentage of revenue converted to free cash flow. Higher margins indicate stronger cash generation and business quality.
| Rating | Range | Interpretation |
|---|---|---|
| Excellent | > 20% | Strong cash generation, high-quality business |
| Good | 10% - 20% | Healthy cash conversion |
| Adequate | 5% - 10% | Moderate cash generation |
| Warning | 0% - 5% | Thin cash margins, capital intensive |
| Red flag | < 0% | Cash burn, potential liquidity concerns |
Current: -6.7% (Red flag - Bottom 50% of sector (median: 0.0%))
Gross Margin
Revenue minus cost of goods sold as a percentage. Higher gross margins indicate pricing power and competitive advantage.
| Rating | Range | Interpretation |
|---|---|---|
| Excellent | > 50% | Strong pricing power and competitive moat |
| Good | 30% - 50% | Healthy margins, differentiated product |
| Adequate | 20% - 30% | Moderate margins, competitive industry |
| Warning | 10% - 20% | Thin margins, commodity-like business |
| Red flag | < 10% | Very thin margins, structural challenges |
Current: 72.7% (Excellent - Top 50% of sector (median: 65.8%))
Debt to Equity Ratio
Total debt divided by shareholders' equity. Lower ratios indicate more conservative financing and reduced financial risk.
| Rating | Range | Interpretation |
|---|---|---|
| Excellent | < 0.3x | Conservative leverage, strong balance sheet |
| Good | 0.3x - 0.7x | Moderate leverage, healthy financial position |
| Adequate | 0.7x - 1.5x | Elevated leverage, monitor closely |
| Warning | 1.5x - 3.0x | High leverage, increased financial risk |
| Red flag | > 3.0x | Excessive leverage, potential distress risk |
Current: 212.3% (Warning)
P/E Ratio (Price-to-Earnings)
Stock price divided by earnings per share. Lower P/E may indicate undervaluation, while higher P/E suggests growth expectations.
| Rating | Range | Interpretation |
|---|---|---|
| Excellent | < 15x | Attractively valued, potential opportunity |
| Good | 15x - 25x | Fair value for quality company |
| Adequate | 25x - 35x | Growth premium, justify with earnings growth |
| Warning | 35x - 50x | High expectations priced in |
| Red flag | > 50x or negative | Speculative valuation or losses |
Current: 25.4x (Adequate)
Free Cash Flow Yield
Free cash flow per share divided by stock price. Higher FCF yield indicates better cash return relative to valuation.
| Rating | Range | Interpretation |
|---|---|---|
| Excellent | > 8% | High cash return, potential value opportunity |
| Good | 5% - 8% | Solid cash yield |
| Adequate | 3% - 5% | Moderate cash return |
| Warning | 1% - 3% | Low cash yield, growth expectations |
| Red flag | < 1% | Minimal cash return to shareholders |
Current: -3.9% (Red flag)
Frequently Asked Questions
Q: What is FIRSTENERGY CORP's Return on Invested Capital (ROIC)?
FIRSTENERGY CORP (FE) has a trailing twelve-month Return on Invested Capital (ROIC) of 4.8%. This compares below the sector median of 5.9%. An ROIC below 8% suggests the company may be destroying shareholder value.
Q: What is FIRSTENERGY CORP's Free Cash Flow Margin?
FIRSTENERGY CORP (FE) has a free cash flow margin of -6.7%, generating $-1.0 billion in free cash flow over the trailing twelve months. Negative free cash flow means the company is consuming cash, which may require financing.
Q: Is FIRSTENERGY CORP stock overvalued or undervalued?
FIRSTENERGY CORP (FE) trades at a P/E ratio of 25.4x, which is above the sector median of N/A. The EV/Sales multiple is 3.3x.
Q: Does FIRSTENERGY CORP pay a dividend?
FIRSTENERGY CORP (FE) currently pays a dividend yield of 4.0%. Including share buybacks, the total shareholder yield is 4.0%. This yield is moderate, suggesting a balance between income and growth reinvestment.
Q: How much debt does FIRSTENERGY CORP have?
FIRSTENERGY CORP (FE) has a debt-to-equity ratio of 2.1x with total debt of $26.6 billion. Net debt position is $26.5 billion.
Q: What is FIRSTENERGY CORP's revenue and earnings growth?
FIRSTENERGY CORP (FE) grew revenue by 12.0% year-over-year. Earnings per share increased by 2.3% compared to the prior year. Solid growth above 10% suggests healthy business momentum.
Q: How does FIRSTENERGY CORP compare to competitors in Utilities?
Compared to other companies in Utilities, FIRSTENERGY CORP (FE) shows: ROIC of 4.8% is below the sector median of 5.9% (Bottom 29%). FCF margin of -6.7% trails the sector median of 0.0% (Bottom 25% of sector). Gross margin at 72.7% is 6.9 percentage points higher than sector peers. These rankings are based on MetricDuck's analysis of all Utilities companies with available SEC filings.
Q: What warning signs should I watch for with FIRSTENERGY CORP?
Investors in FIRSTENERGY CORP (FE) should monitor these potential warning signs: 1) FCF margin is thin at -6.7%, leaving limited buffer for economic downturns. 2) Debt-to-equity of 2.1x is elevated. Regular monitoring of SEC filings and quarterly trends is recommended.
Data Source: Data sourced from 10-Q filed 2025-10-28. TTM metrics as of Q4 2025.
Methodology: Financial metrics calculated from SEC 10-K and 10-Q filings using standardized formulas. Sector comparisons use peer group based on SIC code.
This analysis is for informational purposes only and does not constitute investment advice.