RISK CONCERN
Investment Strategy, Risk Analysis, and Insights by Chartered Professionals
Firstenergy Corp. (XNYS:FE) InDepth Stock/Fundamental/Options Analysis Today
Primary Facts
FE
Name:
FIRSTENERGY CORP. (XNYS:FE)
Sector:
 165000.00K
Industry:
Utilities�Regulated Electric
CEO:
Mr. Charles Jones
Total Employees:
12,395
Our Technological Advancement Rating
Our Rating:
B
Technological advancement compared to industry is 9.77% lower
ANALYSIS OF ALL CRITICAL FACTORS & RISKS RELATED TO THE STOCK & FUNDAMENTAL/LONGTERM ANALYSIS OF FIRSTENERGY CORP.(FE) AS PER DATA ANALYSIS OF LAST 3 YEARS AND COMPARISON WITH COMPETITORS/PEERS, AND UTILITIES�REGULATED ELECTRIC INDUSTRY. DATE: 07/09/2022
Primary Targets/Price Insights
Previous Close ($) :
39.91
One Month Price Target:
$40.01
Six Month Price Target :
$40.5
Likely Price in One Year's Time:
Ticker:
$41.1
Likely Trading Range Today Under (Normal Volatility)
$39.76
Price Upper limit ($) :
$40.06
Price Lower limit ($) :
Crash Risk Prep/Key Price Levels (High Volatility/Risk)
Price, as per data analysis, isn't likely to fall below:
Today:
$38.06
This week:
$35.77
This month :
$31.63
Other Primary facts
Market Cap:
22.70B
Market Cap Classification:
Large Cap
Number of Shares
IPO Date:
571.40M
Best/Worst Daily Performance (Last 3+ Years)
Highest Daily Appreciation:
16.94%
20.91%
Worst Daily Decline:
Our Options Trading Entry Points
Iron Condor entry points for options expiring in 1 week's time
Low risk (<2%) entry points
Buy Call:
Sell Call:
Buy Put:
Sell Put:
$48.50
$44.60
$31.32
$35.22
Medium risk (<10%) entry points
Buy Call
Sell Call
$43.33
Buy Put:
Sell Put:
$42.49
$36.48
$37.33
These entry points can be used for other strategies, such as butterflies, straddles, etc.
RiskAdjusted returns (Sharpe Ratio) of
FE
Sharpe Ratio:
0.42%
Comparison:
FE, is amongst the top 40% stocks with lowest riskadjusted returns
Sharpe ratio is 135.83% lower than the industry
& is 118.42% lower than the market/S&P 500 average
Average Returns/Yield of
FE
Daily returns:
0.00%
Weekly returns:
0.00%
Monthly returns:
0.01%
Yearly returns:
7.85%
Comparison of returns:
Average annual returns/yield (last 3 years) is 101.92% below industry average
Classification:
FE, is amongst the top 40% lowest yielding stocks in terms of daily returns
Results of TTest of Returns:
0.92
Statistical test of Returns:
FE has yielded returns statistically similar to the market
Volatility (measured by Standard Deviation)
Daily Volatility:
2.26%
Weekly Volatility:
5.05%
Monthly Volatility:
10.10%
Yearly Volatility:
34.98%
Volitlilty of last five days (Measured by Standard Deviation)
Average Volatility of this Week:
1.19%
Volatility in last five trading days has been 47.41% below longterm volatility
Value at Risk Analysis (VaR)
Daily VaR:
4.64%
Weekly VaR:
10.37%
Monthly VaR:
20.74%
How Much Can the price of
FE
Decline in a Recession?
Likely price decline in a recession:
Base case (decline):
18%
Worst case (decline):
71.84%
This translates to price declining to:
$32.59
This translates to price declining to:
$11.24
Severe Crash Probability
Risk of crash in next 6/12 months: Low (<25%)
What is Value at Risk (VaR)?
Risk Fundamentals
FE is a 46.37% riskier investment compared to the market/S&P 500 & is 25.40% riskier than Nasdaq (IXIC)
Risk (measured by volatility) is 11.26% above industry average
Overall, it is amongst the top 50% most risky stocks
Beta Examination of
FE
Beta in relation to market/S&P 5000.44
Expected beta in 1 year's time:

Expected beta in 3 year's time:

Unlevered (debt free) Beta:
0.149
Beta in relation to Nasdaq (XNAS):
0.575
Beta in relation to all global stocks::
0.813
Beta Comparison & Analysis
Beta of competitors/peers::
0.569
Beta is 22.14% lower than peers
Average Industry Beta:
0.5
Beta is 11.33% below industry average
Sustainable Growth Rate Analysis
Sustainable growth rate for this stock/firm:
5.04%
Sustainable growth rate is 44.38% above industry average
Alpha provided  Alpha Analysis
Alpha provided:
0.063
Alpha is 596.84% below industry average alpha yield
Alpha is 403% below the market average
Analysis of Cost of Capital of
FE
Equity cost of capital:
0.062
Equity cost of capital is 5.90% below industry mean WACC
Unlevered (without debt) cost of capital:
2.09%
Beforetax cost of debt:
4.70%
Aftertax cost of debt:
3.71%
Overall debt rating:
Lower BB medium grade (Fifth highest grade)
Weighted average cost of capital (WACC):
3.71%
WACC is 6.67% below industry mean WACC
Key PerShare Metrics & Analysis
Revenue per share:
$19.94
Revenue growth rate per share of (3Y):
2.6
Annual revenue growth rate is 778.20% above the industry average
EPS:
$2.24
Expected Annual growth rate of EPS (3Y):
10.12%
Expected future EPS growth rate is 263.61% lower than the Utilities�Regulated Electric industry
Free cash flow (FCF) per share:
$0.47
Balance sheet equity growth per share: 0.54%
Equity growth rate per share is 109.17% lower than the industry
Debt per share
$38.07
EBITDA per share
$7.26
Valuation Analysis Today of
FE
P/E Ratio:
16.79
P/E Ratio of Competitors/Peers:
48.08
P/E ratio is 65.08% lower than main peers & is 39.36% lower than the industry
Stock price/value with industry average P/E ratio: $62.02
FE is 35.65% undervalued if valued using industry average P/E ratio
Share value as per dividend discount (DDM) model: $54.11
Present value of the expected future dividends only: $26.40
P/S (Price to Sales ratio):
2
Price to sales ratio is 31.06% below the industry mean
P/B (Price to book value ratio):
2.6
Price to free cash flow: 85.73

Net income growth rate (3Y):
13.92%
Net income growth rate is 372.58% higher than the average industry net income growth rate
Dividend Analysis
Dividend payout rate: 17.96%
Dividend yeild: 3.91%
Previous Dividend: $0.39
Previous adjusted dividend: $0.39
Previous Dividend: $1.56
Expected next dividend best case: $0.39
Expected next dividend worst case: $0.39
Average dividend payment (longterm): $0.39
Average dividend increase/decrease (growth rate) % per period: 0.26%
Expected next dividend payment date: 30/08/2022
Expected next dividend record date: 08/04/2022
Expected next dividend declaration date: 13/06/2022
Previous dividend payment date: 06/01/2022
Previous dividend record date: 05/06/2022
Previous dividend declaration date: 15/03/2022
Dividend History:
20220505$0.39
20211104$0.39
20210506$0.39
20220204$0.39
20210805$0.39
20210204$0.39
Dividend growth rate is 126.00% lower than the industry average
Indepth Debt & Leverage Analysis
Debt to equity ratio:
248.48%
Net debt to equity ratio:
261.29%
Debt to assets ratio:
48.76%
Net debt to assets ratio:
51.27%
Debttoasset ratio is 22.42% below industry average
Ability to repay debt:
Interest coverage ratio:
3.81
Interest coverage ratio is 48.00% more than industry average
Looking forward:
Debt growth rate:
2.55%
Annual debt growth is 106% lower than industry average debt growth rate
Debt repayment rate in last quarter: 4.59%
Analysis of Key Statistics
Correlation of price movement with the market:
0.567
Statistical significance of correlation:
FE has a statistically significant correlation with the market
Average Correlation of the industry with the market:
0.597
Stock price is 5.02% less correlated with the market compared to the industry average correlation
R Squared (percentage of price movement explained by movement of the market):
0.597
Correlation of price movement with Nasdaq (^IXIC):
0.067
Covariance of price movement with the market:
0.088
Kurtosis
25.252
Returns have severe fattails (leptokurtic), i.e., returns considerably higher or lower than the mean returns are considerably more likely, compared to assets with normally distributed returns
Skewness of returns:
1.696
Returns are left (negative) skewed; mean returns are lower than median and mode returns
Fundamental Analysis & Dupont Analysis of
FE
Gross Profit Margin Ratio:
273%
Operating Profit Margin Ratio:
15.15%
Operating profit margin is 30.19% higher than the industry
Net Profit Margin Ratio:
273%
Effective Tax Rate:
20.95%
Effective tax rate is 4.07% higher than the industry
Dupont Method
Net Profit Margin
Return on Equity Ratio (ROE):
×
ROA
=
×
14.12%
Return on equity (ROE) is 55.30% higher than the industry
Financial Leverage
Asset Turnover Ratio (ROA):
2.77%
Return on assets (ROA) is 19.81% higher than the industry
Financial Leverage:
2.0x
Current Ratio:
0.52
Current ratio is 78.44% below industry average
Cash Conversion Cycle (days):
38.2
Cash conversion cycle is 140.45% below industry average
The remaining useful life of property plant & equipment is: 6.9 years
Stock based compensation to net income ratio:

Indepth Efficiency Analysis
Revenue generated per employee:
919.3K
Each employee generates 67% less revenue than industry average revenue per employee
EBITDA generated per employee:
334.5K
Each employee generates 71% less EBITDA than industry average revenue per employee
Profit generated per employee:
99.7K
Each employee generates 76% less net income/profit than industry average revenue per employee
Free cash flow (FCF) generated per employee:
 13.3K
Each employee generates 60% less free cash flow than industry average revenue per employee
Assets/Capital per employee
3.4M
Each employee generates 60% less free cash flow than industry average revenue per employee
Research & Development (R&D) Analysis


Competitors/Peer firms of
FE
DTE
AMEREN CORPORATION (XNYS:AEE)
PPL CORPORATION (XNYS:PPL)
EDISON INTERNATIONAL (XNYS:EIX)
Fortis Inc. (XNYS:FTS)
PG&E CORPORATION (XNYS:PCG)
Avangrid, Inc. (XNYS:AGR)
CMS ENERGY CORPORATION (XNYS:CMS)
BROOKFIELD INFRASTRUCTURE PARTNERS L.P. (OTCM:BINFF)
Current Analyst Ratings
Strong buy�4%
Buy�21%