FE

FirstEnergy Corp

Energy


Presented:11/22/2016
Price:$31.90
Cap:$13.62B
Current Price:$43.50
Cap:$25.05B

Presented

Date11/22/2016
Price$31.90
Market Cap$13.62B
Ent Value$36.10B
P/E RatioN/A
Book Value$27.02
Div Yield0.05%
Shares O/S427.00M
Ave Daily Vol4,245,634
Short Int2.88%

Current

Price$43.50
Market Cap$25.05B
FirstEnergy Corp. is a diversified energy company. It is engaged in the generation, transmission and distribution of electricity, as well as energy management and other energy-related services through its subsidiaries. The company operates through three segments: Regulated Distribution, Regulated Transmission and Competitive Energy Services. The Regulated Distribution segment distributes electricity through FirstEnergy's utility operating companies, serving various customers within Ohio, Pennsylvania, West Virginia, Maryland, New Jersey and New York. The Regulated Transmission segment transmits electricity through transmission facilities owned and operated by FirstEnergy's utilities and the regulatory assets. The Competitive Energy Services segment supplies electricity to end-use customers through retail and wholesale arrangements, including competitive retail sales to customers primarily in Ohio, Pennsylvania, Illinois, Michigan, New Jersey and Maryland, and the provision of partial POLR and default service for some utilities in Ohio, Pennsylvania and Maryland, including the utilities. FirstEnergy was founded in 1996 and is headquartered in Akron, OH.

Public companies mentioned herein: First Energy (FE).

Highlights

The presenter is long shares of regulated utility First Energy on the thesis that the company will soon attempt to monetize or altogether shed its less attractive unregulated businesses. Accordingly, the presenter expects that approximately one year from now, only First Energy’s purely regulated utility businesses in NJ, OH and PA will remain – markets in which the company has already negotiated rates and therefore has good visibility into earnings for at least the next 3 years. The stock - currently trading at around 13 times the presenter’s earnings estimate for the regulated businesses - should eventually re-rate closer to that of a fully regulated utility at around 16 times. Further, the restructuring of the company should realize meaningful additional tax value per share due to NOLs currently carried at FE’s unregulated subsidiaries.

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