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FirstEnergy Corp. (FE)

Company Dividend Discount ModelIndustry: Regulated ElectricSector: Utilities

Valuation Snapshot

Stable Growth$26.80 - $44.22$34.53
Multi-Stage$33.80 - $36.90$35.32
Blended Fair Value$34.92
Current Price$45.82
Upside-23.78%
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 Rate9.08%9.08%9.08%
Growth Rate2.07%3.07%4.07%
Fair Value$26.80$34.53$44.22
Upside / Downside-41.50%-24.64%-3.50%

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 Rate9.08%9.08%9.08%
Growth Rate2.07%3.07%4.07%
Year 1 PV (M)975.61985.17994.73
Year 2 PV (M)946.73965.37984.19
Year 3 PV (M)917.53944.76972.53
Year 4 PV (M)888.17923.49959.86
Year 5 PV (M)858.80901.70946.30
PV of Terminal Value (M)14,952.8715,699.8316,476.35
Equity Value (M)19,539.7120,420.3221,333.95
Shares Outstanding (M)578.15578.15578.15
Fair Value$33.80$35.32$36.90
Upside / Downside-26.24%-22.92%-19.47%

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