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FirstEnergy Corp. (FE): New Analyst Report from Zacks Equity Research - Zacks Equity Research Report

By: Zacks.com
Posted: 1/24/2014 7:00:00 AM
Referenced Stocks: TE;PN;ME;PE;FES

Summary:
The modest improvement in the economy in FirstEnergy's service territories and a growing transmission business are expected to boost earnings going forward. FirstEnergy through its investments in the Energizing the Future initiative is strengthening and enhancing its existing operational capabilities, which will enable it to service the extra load. The company's revenues increased 2.7% during the first nine months of 2014 from prior year and its operating cash flow improved 4% in the same period. However, the EPA's Clean Power Plan proposal, which aims at lowering carbon emissions, might impact its coal-fired electricity producing units. The competitive environment of the wholesale and retail electric market could put pressure on the company's bottom line. We have retained our Neutral recommendation on the stock.

Overview:

Headquartered in Akron, OH, FirstEnergy Corporation is a diversified energy company. Through its subsidiaries and affiliates, the company engages in the generation, transmission and distribution of electricity, as well as energy management and other energy-related services. Following its merger with Allegheny Energy Inc., FirstEnergy operates in seven states, namely, Ohio, Pennsylvania, New Jersey, New York, Virginia, Maryland and West Virginia. FirstEnergy has the nation's largest investor-owned electric system.

FirstEnergy's diverse generating fleet features non-emitting nuclear, scrubbed coal, natural gas, and pumped storage hydro and other renewable energy plants. The company had a total generating capacity of roughly 17,790 megawatts (MW) as of Sep 30, 2014, of which 14,000 MW comprised its competitive generation fleet and 3,790 MW its regulated fleet.

Source: Company

FirstEnergy provides electricity services through its utility operating subsidiaries Ohio Edison (OE), Cleveland Electric Illuminating Company (CEI), Toledo Edison (TE), Penelec (PN), Met-Ed (ME), Penn Power (PP), West Penn Power (WP), Jersey Central Power & Light (JCP&L), Monongahela Power Company (MP), The Potomac Edison Company (PE), American Transmission Systems, Inc. (ATSI), and Trans-Allegheny Interstate Line Company (TrAIL) the company sells energy and related products and services through its unregulated competitive subsidiaries FirstEnergy Solutions Corp. (FES) and Allegheny Energy Supply Company, LLC (AE Supply).

FirstEnergy covers 65,000 square-mile areas of Ohio, Maryland, New Jersey, New York, Pennsylvania and West Virginia. As of now, the company maintains a utility customer base of 6 million.


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