FirstEnergy (FE) Down 9.3% Since Last Earnings Report: Can It Rebound?

A month has gone by since the last earnings report for FirstEnergy (FE). Shares have lost about 9.3% in that time frame, outperforming 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 drivers.

FirstEnergy Q4 Earnings Beat Estimates, Revenues Miss

FirstEnergy delivered fourth-quarter 2019 operating earnings of 55 cents per share, which beat the Zacks Consensus Estimate of 48 cents by 14.6%. Quarterly earnings increased 10% year over year.

On a GAAP basis, the company incurred a loss of 20 cents against earnings of 25 cents in the prior-year quarter.

In 2019, FirstEnergy delivered earnings of $2.58, down from $2.59 in 2018. The actual results in at the top end of the expected guidance range of $2.50 - $2.60 per share.

Total Revenues

FirstEnergy generated total revenues of $2,673 million in fourth-quarter 2019, which missed the Zacks Consensus Estimate of $2,745 million by 2.6%. The figure declined from $2,710 million in the year-ago quarter.

In 2019, FirstEnergy generated revenues of $11,035 million, down from $11,261 million a year ago.

Highlights of the Release

Residential sales fell 3.1% on a year-over-year basis. Commercial deliveries declined 4.3% and industrial sales fell 2.4% year over year. Total distribution deliveries declined 3.2% from prior-year quarter’s levels due to milder-than-expected temperatures as well as lower commercial and industrial usage.

In the reported quarter Heating-degree-days were down 7% year over year.

Total operating expenses in the quarter under review amounted to $ 2,058 million, down from $2,198 million in the prior-year quarter.

In the fourth quarter, operating income was $ 615 million, up from $512 million in the year-ago quarter.

Guidance

Management guided 2020 earnings per share in the range of $2.40-$2.60, whose mid-point of $2.50 is higher than the current Zacks Consensus Estimate for the period of $2.49. Also, the company provided first-quarter earnings guidance in the range of 60-70 cents, whose mid-point of 65 cents is higher than the current Zacks Consensus Estimate for the quarter of 63 cents.

How Have Estimates Been Moving Since Then?

Estimates review followed an upward path over the past two months.

VGM Scores

At this time, FirstEnergy has a poor Growth Score of F, however its Momentum Score is doing a lot better with a B. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. 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.