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FirstEnergy Corp. (FE)

Company Dividend Discount ModelIndustry: Regulated ElectricSector: Utilities

Valuation Snapshot

Stable Growth$26.73 - $44.06$34.43
Multi-Stage$33.70 - $36.79$35.21
Blended Fair Value$34.82
Current Price$45.82
Upside-24.01%
DecisionDon't Buy

Dividend History & Growth Metrics (10Y)

Metric5Y CAGR10Y CAGR2024202320222021202020192018201720162015
DPS3.57%4.85%1.681.571.541.471.461.411.231.111.061.05
YoY Growth--7.06%1.68%4.95%0.47%3.81%14.49%11.27%4.58%0.66%0.50%
Dividend Yield--4.15%4.08%3.85%3.20%4.21%3.51%2.97%3.25%3.32%2.92%

Stable Growth Model (Adjusted)

(USD in Millions except Per Share Data)
Net Income To Common (M)1,330.00
(-) Cash Dividends Paid (M)1,004.00
(=) Cash Retained (M)326.00
MetricLOWBASEHIGH
Required Retention Ratio20.0%12.5%7.5%
(=) Cash Required (M)266.00166.2599.75
Cash Retained (M)326.00326.00326.00
(-) Cash Required (M)-266.00-166.25-99.75
(=) Excess Retained (M)60.00159.75226.25
(/) Shares Outstanding (M)578.15578.15578.15
(=) Excess Retained per Share0.100.280.39
LTM Dividend per Share1.741.741.74
(+) Excess Retained per Share0.100.280.39
(=) Adjusted Dividend1.842.012.13
WACC / Discount Rate9.10%9.10%9.10%
Growth Rate2.07%3.07%4.07%
Fair Value$26.73$34.43$44.06
Upside / Downside-41.65%-24.87%-3.85%

Multi-Stage Model: Projections

(USD in Millions)
MetricTTMDec-27Dec-28Dec-29Dec-30Dec-31Terminal
Net Income (M)1,330.001,370.851,412.961,456.361,501.091,547.201,593.61
Payout Ratio75.49%78.39%81.29%84.20%87.10%90.00%92.50%
Projected Dividends (M)1,004.001,074.621,148.641,226.191,307.421,392.481,474.09

Multi-Stage Valuation

MetricLOWBASEHIGH
WACC / Discount Rate9.10%9.10%9.10%
Growth Rate2.07%3.07%4.07%
Year 1 PV (M)975.45985.01994.56
Year 2 PV (M)946.42965.05983.87
Year 3 PV (M)917.07944.29972.04
Year 4 PV (M)887.58922.88959.22
Year 5 PV (M)858.09900.96945.52
PV of Terminal Value (M)14,896.4415,640.5816,414.17
Equity Value (M)19,481.0520,358.7721,269.39
Shares Outstanding (M)578.15578.15578.15
Fair Value$33.70$35.21$36.79
Upside / Downside-26.46%-23.15%-19.71%

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