Is Now the Right Time to Reassess FirstEnergy After 18.7% Share Price Climb in 2025?

• Ever wondered if FirstEnergy is trading at an attractive price right now, or if you’d be stepping in after the value has already run its course?
• The stock has put in steady gains this year, climbing 18.7% year-to-date and racking up a 16.0% rise over the last twelve months. This suggests markets may be rethinking the company’s growth or risk profile.
• Recent news including continued investments in the energy grid and expanded renewable energy initiatives have kept FirstEnergy in the spotlight. These developments highlight its strategy to modernize its infrastructure and appear to be gaining investor approval, which could lay the foundation for future growth.
• When it comes to valuation, FirstEnergy scores a 2 out of 6 on our valuation checklist. But are traditional models really telling the whole story? In a moment, we will break down the main valuation methods and, at the end of this article, reveal a fresh perspective that might change how you think about value entirely.

FirstEnergy scores just 2/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: FirstEnergy Dividend Discount Model (DDM) Analysis

The Dividend Discount Model (DDM) estimates the value of a stock by projecting its future dividend payments and discounting them back to today’s value. This model focuses on whether a company’s dividend stream is sustainable and likely to grow, making it ideal for evaluating utilities like FirstEnergy.

For FirstEnergy, the most recent annual dividend per share is $1.92. The company’s reported return on equity (ROE) is 9.15%, and its payout ratio is an exceptionally high 99.18%. Using the DDM, the sustainable dividend growth rate is calculated to be just 0.07%, based on the formula (1 – payout ratio) multiplied by ROE. This suggests limited room for dividend growth, as nearly all profits are paid out to shareholders.

The resulting intrinsic value from this model is $27.86 per share. When compared with FirstEnergy’s current trading price, this valuation implies the stock is about 70.0% overvalued based on future dividend expectations.

Result: OVERVALUED

Our Dividend Discount Model (DDM) analysis suggests FirstEnergy may be overvalued by 70.0%. Discover 923 undervalued stocks or create your own screener to find better value opportunities.

FE Discounted Cash Flow as at Nov 2025

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for FirstEnergy.

Approach 2: FirstEnergy Price vs Earnings

The Price-to-Earnings (PE) ratio is widely regarded as a suitable valuation tool for profitable companies like FirstEnergy because it connects what investors are currently paying to the company’s ongoing ability to generate profits. This ratio helps investors gauge whether a stock trades at a premium or discount relative to its earnings power.

Growth prospects and risk levels have a significant impact on where a “normal” or “fair” PE ratio should sit. Higher growth or lower risk typically justifies a loftier multiple, while slower-growing or riskier firms deserve a lower one. It is important to see where FirstEnergy stands not just in isolation but also relative to its industry and its closest peers.

Currently, FirstEnergy trades at 20.57x earnings. This compares to the electric utilities industry average of 20.90x and a peer group average of 16.20x. While the stock appears to sit slightly below the sector average but above peers, Simply Wall St’s proprietary Fair Ratio provides a more tailored picture. The Fair Ratio for FirstEnergy is calculated at 21.94x, taking into account the company’s unique prospects such as its growth, profitability, risk profile, and market size. This approach goes beyond broad averages to establish a multiple that is specific to the business in question.

Because FirstEnergy’s actual PE ratio of 20.57x is very close to its Fair Ratio, there is no clear sign of mispricing at current levels.

Result: ABOUT RIGHT

NYSE:FE PE Ratio as at Nov 2025

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1439 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your FirstEnergy Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let’s introduce you to Narratives.

A Narrative is a simple, powerful framework that lets you express your personal view of a company’s future by telling a story behind the numbers: your own assumptions about FirstEnergy’s future revenue, earnings, and profit margins, and what you think a fair value should be.

Rather than just relying on traditional valuation models, Narratives help you directly link your understanding of a company’s business story to a forecast and then compute a fair value, connecting what you believe about the company to a clear investment decision.

On Simply Wall St’s Community page, which is used by millions of investors, you can easily build and share your Narrative for FirstEnergy, see others’ perspectives, and instantly check if your Fair Value is above or below the current Price to help with your decision making.

Narratives update rapidly as news, earnings, and new information emerge, ensuring your outlook can always stay current.

For example, some investors believe rapid demand growth and grid modernization will justify a Fair Value for FirstEnergy as high as $49.92, while others, factoring in regulatory and cost pressures, estimate a lower value closer to $27.86. Your Narrative is your edge.

Do you think there’s more to the story for FirstEnergy? Head over to our Community to see what others are saying!

NYSE:FE Community Fair Values as at Nov 2025

This article by Simply Wall St is general in nature. We provide commentary based on historical data
and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your
financial situation. We aim to bring you long-term focused analysis driven by fundamental data.
Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
Simply Wall St has no position in any stocks mentioned.

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