QUOTE AND NEWS
Forbes  Sep 3  Comment 
In afternoon trading on Wednesday, Utilities stocks are the best performing sector, higher by 0.5%. Within that group, FirstEnergy (NYSE: FE) and Edison International (NYSE: EIX) are two of the day's stand-outs, showing a gain of 1.3% and 1.3%,...
Market Intelligence Center  Aug 29  Comment 
The patented option-trade picking algorithms that power MarketIntelligenceCenter.com's Artifical Intelligence Center found a trading opportunity with FirstEnergy Corp. (FE) that should provide a 3% return in just 231 days. Sell one Apr. '15 call...
Automotive World  Aug 20  Comment 
Volvo Trucks is expanding its model range in Europe with a new version of the Volvo FE running entirely on methane gas. The Volvo FE CNG (Compressed Natural Gas) has been primarily developed for operations involving short driving cycles with...
Forbes  Aug 20  Comment 
Johnny Manziel is once again making waves in the football world. This time around, however, he has taken his brand of braggadocio to the NFL.  For three years, he plied his trade at Kyle Field in College Station, Texas, however in 2014,  he’ll...
Market Intelligence Center  Aug 7  Comment 
Option-trade picking algorithms patented by MarketIntelligenceCenter.com found a trading opportunity with FirstEnergy Corp. (FE) that should provide a 3.92% return in just 163 days. Sell one Jan. '15 call at the $31.00 level for each 100 shares of...
Benzinga  Aug 6  Comment 
Analysts at BGC Partners upgraded FirstEnergy (NYSE: FE) from Hold to Buy. FirstEnergy shares have declined 16.44% over the past 52 weeks, while the S&P 500 index has gained 13.56% in the same period. FirstEnergy's shares gained 4.01% to close...
Benzinga  Aug 6  Comment 
SeekingAlpha  Aug 5  Comment 
FirstEnergy Corporation (NYSE:FE) Q2 2014 Earnings Conference Call August 5, 2014 1:00 PM ET Executives Meghan Beringer – Director, IR Anthony Alexander – President and CEO Leila Vespoli – EVP, Markets, and Chief Legal...
TheStreet.com  Aug 5  Comment 
NEW YORK (TheStreet) -- Shares of FirstEnergy Corp. are higher by 3.52% to $31.78 in afternoon trading on Tuesday, after the company reported earnings of $64 million, or 16 cents per share for the 2014 second quarter, compared to a loss of -$164...
newratings.com  Aug 5  Comment 
WASHINGTON (dpa-AFX) - FirstEnergy Corp. (FE) on Tuesday reported a turnaround to profit in the second quarter as slightly lower revenues were more than offset by a decline in expenses. Both revenue and adjusted earnings per share for the...
Wall Street Journal  Aug 5  Comment 
FirstEnergy said its operating earnings decreased in the second quarter, hurt by higher expenses and investments in maintenance, while the utility benefited from a lower tax rate and higher transmission revenue.




 

FirstEnergy (NYSE: FE) is a electric utility holding company. FirstEnergy holds directly or indirectly eight electric utility operating subsidiaries and other energy companies located primarily in Ohio, Pennsylvania, and New Jersey.[1] FirstEnergy generates its revenues from the electric services provided by its subsidiaries. Its operations are divided into the energy delivery services and competitive energy services.[2] The Company is in transitioning all of its holdings to a market-rate price structure, which further exposes its subsidiaries to volatile commodity prices for coal and natural gas.

Business Growth

FirstEnergy earned $784 million in net income on revenues of $13.3 billion in 2010, versus net income of $1 billion on revenues of $12.6 billion in 2009.[3] The key determine for revenue growth is the demand for electric energy and overall energy prices. FirstEnergy has also grown its customer base by 35% through the acquisition of Allegheny Energy.[4]



Trends and Forces

FirstEnergy's new price structure increases its exposure to commodity prices

FirstEnergy plans to move all of its holdings to a market-rate structure, which has the potential of increasing its exposure to volatile commodity prices for power, coal and natural gas.[5] Traditionally, approximately 20% of FirstEnergy's generation business was exposed to market prices.[6] After completing its price structure transition, all of FirstEnergy's generation business will be exposed to power market prices. As a result, the company's profitability depends on the relationship between coal and gas prices as well as the demand for power.[7] Volatile commodity prices have the potential of straining the Company's profits as well as its cash flows.[8]



Deregulation in offers opportunity for higher revenues and increased competition

Like all utility companies, FirstEnergy is subject to regulatory and legislative risks that have the potential of raising costs and capping returns. Traditionally, the price that utility companies could charge consumers for electricity generation has been capped by state regulators.[9] However, many states have started deregulating their energy industries with the intent of lowering prices by letting retail customers "shop" for the company that generates their electricity.[10] New Jersey and Pennsylvania both have market-rate generation prices and Ohio has recently taken legislative steps in the same direction.[11]

In most states, however, utilities rates have actually increased in the short term following the removal of rate caps as companies move to align their prices with their costs. If electric prices in Ohio react as they have in other states, FirstEnergy will be able to charge more for its services in a competitive environment. FirstEnergy's low cost nuclear and coal-powered electrical facilities have the potential of giving the company a competitive advantage and lead to a rise in returns from these facilities. However, the Company has had to readjust its business model from a capped rate price structure to a market-rate price structure. Also as a result of deregulation, FirstEnergy faces increased competition, which has the potential of leading to lower prices.[12]

Competitors

FirstEnergy's distribution services are regulated by state governments and have a service monopoly over their areas.[13] In generation industry, FirstEnergy competes with numerous energy companies operating in the Midwest and East Coast.[14] Many industries have engaged in cost-cutting initiatives in order to combat lower demand and costlier feedstocks. In a manner similar to FirstEnergy, many utility companies have switched to a market-price structure in order to adapt to volatile commodity prices.[15]

In the generation space, FirstEnergy competes with the following:


References

  1. Reuters.com: FirstEnergy Profile
  2. Google Finance: FirstEnergy Profile
  3. FirstEnergy 2010 Annual Report
  4. FirstEnergy 2010 Annual Report
  5. First Energy Press Releases FirstEnergy Solutions Offering New Low Price on Electric Generation to Penelec Residential Customers
  6. IstockAnalyst: Our Outlook for Utilities Stock 3/30/2011
  7. IstockAnalyst: Our Outlook for Utilities Stock 3/30/2011
  8. IstockAnalyst: Our Outlook for Utilities Stock 3/30/2011
  9. Forbes.com:Electric Deregulation Finally Takes Off
  10. Forbes.com:Electric Deregulation Finally Takes Off
  11. Cleveland.com: Energy deregulation in Ohio: Utilities
  12. Forbes.com:Electric Deregulation Finally Takes Off
  13. FirstEnergy 2010 Annual Report
  14. FirstEnergy 2010 Annual Report
  15. Yahoo! finance: Competitors for FirstEnergy
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