FE
FirstEnergy Corp.
$46.31
Stable Earnings Power
85%
P/Adj-EPS × Normalized Multiple
Moderate
·
Conviction
Overvalued
Trading 36.3% above fair value
You pay
$46.31
Bear
$29.73
Fair
$33.98
Bull
$38.22
Bear
$29.73
-35.8%
$1.76 × 14x P/E
Fair
$33.98
-26.6%
$1.76 × 16x P/E
Bull
$38.22
-17.5%
$1.76 × 18x P/E
Key Value Driver
Normalized P/E multiple (16x base case)
Implied Market Multiple
26.3x
Summary
Our base-case estimate uses a valuation based on adjusted earnings per share and a normalized price-to-earnings multiple. We then blend that result with the average analyst price target of $51.43 from 28 analysts, using a 25% weight on analyst consensus. That produces an estimated intrinsic value of $33.98 per share.
Warnings
The company pays out 102% of its profits as dividends. That leaves little cushion — the dividend could be cut if business slows down.
Dividend-based valuation: $36.34 (above our primary estimate by 29%). Large gaps may signal the dividend doesn't reflect full earning power.
Wall Street's average price target is $51.43 (from 28 analysts). Our estimate is 45% below the consensus -- consider that gap carefully.
Key Risks
- Growth DCF inappropriate — terminal value assumptions dominate
- EV/EBITDA misleading for regulated businesses where capex is mandated
- Regulatory risk is a fat tail not visible in normal multiples