FirstEnergy Corp.FENYSE

Overview Intelligence Charts News Fundamentals Key Metrics TTM Financials Earnings Growth Rating Analysts Institutional Peers Historical

DCF Valuation

DCF Valuation Summary

Hold

Fair Value: $58.47 per share(market-calibrated)

+14.7%

Upside to Fair Value

Current

$50.98

Pure Model

$61.61

Fair Value

$58.47

Bull Case

$70.43

Bear Case

$57.52

Market Reality Check

Model Terminal Growth

2.00%

Market-Implied Growth

1.06%

Calibrated Growth

1.76%

Fair value uses 75% model / 25% market-implied terminal growth. Pure model: $61.61.

What's Driving This Ratingfor FE

↓

CapEx normalizing toward maintenance

Historical CapEx is 22.92% of revenue (heavy investment phase). Model fades this to 5.00% by Year 10, freeing up ~$2.8B in annual FCF. This is the biggest driver of long-term cash flow improvement.

⚠

Analyst growth decelerates sharply

Revenue growth drops from -1.46% in Year 1 to -3.22% by Year 5 (per analyst consensus). That's below the 2.00% terminal rate, so growth re-accelerates in Years 6-10 — a generous assumption. This growth deceleration is a key reason the model may undervalue the stock if growth re-accelerates.

↔

Perpetuity and exit methods disagree

Perpetuity growth gives $72.11/share (29.1x terminal FCF) while exit multiple gives $51.11/share (22.8x terminal FCF). The base case averages both methods.

✓

Model and market roughly agree

Market-implied terminal growth of 1.06% is close to the model's 2.00% (only 94bps apart). The DCF assumptions are well-aligned with how the market is pricing this stock.

✓

Strong cash flow conversion

Year 10 FCF/EBITDA conversion of 70.24% indicates efficient cash generation. FCF reaches $3.3B by Year 10 (20.97% FCF margin).

Weighted Average Cost of Capital (WACC)

Cost of Equity (CAPM)

Risk-Free Rate (Rf)4.50%

Beta (β)0.62

Market Risk Premium4.50%

*Using current implied premium (4.5% per Damodaran 2026), not historical (6.5%)

Cost of Equity (Re)7.29%

Cost of Debt

Pre-tax Cost of Debt3.84%

Tax Rate18.47%

After-tax Cost of Debt3.13%

Equity Weight (E/V)52.08%

Debt Weight (D/V)47.92%

WACC Calculation

WACC = (E/V × Re) + (D/V × Rd × (1-Tc))

WACC = (52.08% × 7.29%) + (47.92% × 3.13%)

= 5.50%

10-Year Free Cash Flow Projections(showing years 1, 3, 5, 7, 10)

Year	Year 1	Year 3	Year 5	Year 7	Year 10
Revenue	$14.9B	$16.1B	$15.6B	$15.1B	$15.5B
EBIT	$3.0B	$3.2B	$3.1B	$3.0B	$3.1B
Tax	$547M	$592M	$574M	$556M	$572M
NOPAT	$2.4B	$2.6B	$2.5B	$2.5B	$2.5B
+ Depreciation	$1.5B	$1.6B	$1.5B	$1.5B	$1.5B
- Capex	$3.4B	$3.0B	$2.3B	$1.7B	$776M
- Δ NWC	-$22M	$66M	-$52M	-$17M	$30M
Free Cash Flow	$498M	$1.1B	$1.8B	$2.3B	$3.3B
Discount Factor	0.948	0.852	0.765	0.687	0.585
Present Value	$472M	$928M	$1.4B	$1.6B	$1.9B

FCF Formula: Free Cash Flow = NOPAT + Depreciation - Capex - Change in Net Working Capital

Terminal Value Calculation

Perpetuity Growth Method

Year 10 FCF$3.3B

Terminal Growth Rate2.00%

WACC5.50%

TV = FCF₁₀ × (1+g) / (WACC-g)

Terminal Value$94.8B

PV of Terminal Value$55.5B

Exit Multiple Method

Year 10 EBITDA$4.6B

Exit Multiple (EV/EBITDA)16.0x

TV = EBITDA₁₀ × Exit Multiple

Terminal Value$74.1B

PV of Terminal Value$43.4B

Valuation Summary

Perpetuity Growth Method

PV of Projected FCFs$13.1B

PV of Terminal Value$55.5B

Enterprise Value$68.6B

(-) Net Debt$27.0B

Equity Value$41.6B

Shares Outstanding577M

Price per Share$72.11

Exit Multiple Method

PV of Projected FCFs$13.1B

PV of Terminal Value$43.4B

Enterprise Value$56.5B

(-) Net Debt$27.0B

Equity Value$29.5B

Shares Outstanding577M

Price per Share$51.11

Pure Model Fair Value

$61.61

Average of perpetuity growth and exit multiple methods (before market calibration)

Sensitivity AnalysisPrice per Share

WACC ↓ / Growth →	1.00%	1.50%	2.00%	2.50%	3.00%
3.50%	$105.21	$125.89	$118.65	$111.75	$105.18
4.50%	$71.10	$80.14	$92.78	$111.75	$105.18
5.50%	$50.56	$55.39	$61.61	$69.90	$81.51
6.50%	$36.37	$39.28	$42.83	$47.27	$52.99
7.50%	$25.76	$27.64	$29.87	$32.54	$35.81

How to read: This table shows how the valuation changes with different WACC (discount rate) and terminal growth rate assumptions. Green = undervalued, Red = overvalued.

Scenario Analysis

Bear Case

$57.52

12.8% vs current

• -25% vs analyst consensus
• Terminal growth: 2.0%
• Beta: 0.78

Base Case

$61.61

20.8% vs current

• Analyst consensus
• Terminal growth: 2.0%
• Beta: 0.62

Bull Case

$70.43

38.2% vs current

• +25% vs analyst consensus
• Terminal growth: 2.5%
• Beta: 0.53

Key Assumptions & Drivers✓ Using Analyst Consensus Estimates• Utilities Sector

Growth Assumptions (Select Years)

Year 1 Revenue Growth-1.46%

Year 3 Revenue Growth4.29%

Year 5 Revenue Growth-3.22%

Year 7 Revenue Growth-1.13%

Year 10 Revenue Growth2.00%

Terminal Growth Rate2.00%

Margin & Efficiency

Current EBIT Margin19.92%

Terminal EBIT Margin20.00%

Tax Rate18.47%

Historical Capex / Rev22.92%

Terminal Capex / Rev5.00%

NWC / Revenue10.00%

Key Drivers: Revenue growth, operating margin expansion, capex efficiency, and working capital management are the primary drivers of cash flow generation. Terminal value assumptions significantly impact final valuation.

Institutional-Grade Methodology

Actual Company Data: Revenue, EBIT, Capex, NWC, Tax Rate, Interest Expense, Beta

Market Assumptions: Risk-free: 4.5% (10Y), MRP: 4.5% (Damodaran 2026), Exit: 16x EV/EBITDA (Utilities sector)

This DCF model is for informational purposes only. Projections are based on assumptions that may not materialize. Past performance does not guarantee future results. Consult a financial advisor before making investment decisions.

Explore More

S&P 500 Screener

Filter and sort all 500 stocks

Market Movers

Today's biggest gainers and losers

Market Heatmap

Visual sector performance