Why FirstEnergy Corp. (NYSE: FE) stock is under pressure

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FirstEnergy Corp. (NYSE: FE) stock fell over 2.1% on 24th April, 2020 (as of 11:40 am GMT-4 ; Source: Google finance) after the company reported the GAAP net profit of $74 million compared to $315 million in last year’s first quarter. FE in the first quarter of FY 20 has reported the adjusted earnings per share of 66 cents, while reported 6.9 percent fall in the adjusted revenue to $2.7 billion in the first quarter of FY 20.

Further, in the company’s Regulated Distribution business, during the first quarter 2020, the operating results benefited from the implementation of decoupled rates in Ohio, incremental rider revenues in Ohio and Pennsylvania, and lower expenses compared to the first quarter of 2019, which was offset by the impact of mild temperatures on distribution deliveries, the absence of the Ohio Distribution Modernization Rider, and higher depreciation and net financing costs. Total distribution deliveries had fallen by 7.8% compared to the first quarter of 2019 on the back of mild temperatures and lower usage. Residential sales had fallen 12.6%, mainly on the back of a nearly 18% decline in heating degree days compared to the first quarter of 2019. Commercial deliveries had fallen 7.5%, while sales to industrial customers declined 3%.

For the second quarter of 2020, FirstEnergy is expecting a GAAP and operating (non-GAAP) forecast to be in the range of $260 million to $315 million, or $0.48 to $0.58 per share based on 542 million shares outstanding.

For 2020, FirstEnergy is updating its full-year GAAP earnings forecast & expects it to be in the range of $1.02 billion to $1.13 billion, or $1.88 to $2.08 per share, based on 542 million shares. The company has affirmed its full-year 2020 operating (non-GAAP) guidance to be in the range of $2.40 to $2.60 per share.

FirstEnergy has also affirmed its long-term growth rate projections. The company is on track to achieve the range 6% to 8% compound annual operating (non-GAAP) earnings growth (CAGR) from 2018 to 2021, as well as its extended CAGR to be in the range of 5% to 7% through 2023. That projection has included the plans to issue up to $600 million of equity annually starting in 2022 for funding the company’s regulated growth initiatives.

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