DCF Studio

    FE · NYQ · Utilities

    FirstEnergy Corp.

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD 3.20

    Market price

    USD 47.63

    Implied upside

    -93.3%

    10-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case · Price 2026-11-02 · Accounts to 2025-12-31

    Wrong toolThis model values the shares at 6.7% of the market price. A gap that size is a modelling failure rather than a view - most often an unusable beta, a currency or units mismatch, or a cashflow base that does not represent the business. Read the figures below as diagnostics, not as a call.
    AdjustedFree cashflow is negative in at least one forecast year, so terminal value carries most of the valuation.
    AdjustedCapital expenditure runs at 27.5% of revenue against depreciation of 10.4%. A perpetuity has to be a steady state, so the forecast tapers capex to maintenance at depreciation plus the reinvestment terminal growth requires (g/ROIC of NOPAT), and the terminal year carries on from there. The bridge is shown under Terminal Value.

    Value Per Share

    Perpetuity growth
    USD 3.20-93.3%
    Exit multiple
    USD 9.19-80.7%
    Market price
    USD 47.63

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    -0bn1bn2bnFY26FY27FY28FY29FY30FY31FY32FY33FY34FY35
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30FY31FY32FY33FY34FY35CAGR
    RevenueUSD 15.9bnUSD 16.8bnUSD 17.7bnUSD 18.5bnUSD 19.3bnUSD 20.1bnUSD 20.9bnUSD 21.6bnUSD 22.2bnUSD 22.7bn+4.1%
    EBITUSD 2.8bnUSD 3.0bnUSD 3.1bnUSD 3.3bnUSD 3.4bnUSD 3.5bnUSD 3.7bnUSD 3.8bnUSD 3.9bnUSD 4.0bn+4.1%
    NOPATUSD 2.2bnUSD 2.3bnUSD 2.5bnUSD 2.6bnUSD 2.7bnUSD 2.8bnUSD 2.9bnUSD 3.0bnUSD 3.1bnUSD 3.2bn+4.1%
    Add depreciation & amortisationUSD 1.7bnUSD 1.8bnUSD 1.8bnUSD 1.9bnUSD 2.0bnUSD 2.1bnUSD 2.2bnUSD 2.2bnUSD 2.3bnUSD 2.4bn+4.1%
    Less capital expenditureUSD -4.4bnUSD -4.4bnUSD -4.4bnUSD -4.4bnUSD -4.3bnUSD -4.3bnUSD -4.2bnUSD -4.0bnUSD -3.9bnUSD -3.7bn-1.9%
    Capex, % of revenue27.5%26.2%25.0%23.7%22.5%21.2%19.9%18.7%17.4%16.1%-
    Less increase in working capitalUSD 17.6mUSD 19.7mUSD 19.3mUSD 18.8mUSD 18.1mUSD 17.3mUSD 16.3mUSD 15.1mUSD 13.7mUSD 12.2m+4.0%
    Free cashflow to firmUSD -490.0mUSD -304.7mUSD -98.9mUSD 128.6mUSD 377.1mUSD 645.0mUSD 930.5mUSD 1.2bnUSD 1.5bnUSD 1.9bn-
    Discount factor0.97100.91540.86300.81360.76700.72310.68170.64270.60590.5713-
    Present valueUSD -475.8mUSD -278.9mUSD -85.4mUSD 104.7mUSD 289.2mUSD 466.4mUSD 634.3mUSD 791.5mUSD 936.3mUSD 1.1bn-
    Present Value Of The ForecastUSD 3.4bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate4.89%US 10-year Treasury (^TNX), 2026-11-02
    Equity risk premium4.23%Damodaran, January 2026
    Beta0.581Reported 0.374, pulled toward 1.0 (Blume)
    Cost of equity7.35%Risk-free + beta x equity risk premium
    Cost of debt6.00%Risk-free + 111bp, the spread for a BBB rating at 2.7x interest cover. Book interest / average debt was lower, at 4.1%.
    Market capitalisationUSD 27.6bn50.9% of capital
    Total debtUSD 26.6bn49.1% of capital, book value as a proxy
    Tax rate21.0%Effective, capped at statutory
    WACC6.07%E/V x Re + D/V x Rd x (1 - t)

    Terminal Value

    Perpetuity growth is intrinsic. The exit multiple defaults to the company's current EV/EBITDA, so it answers a different question - what the shares are worth if today's rating holds and EBITDA grows as forecast.

    Perpetuity growth at 2.50%

    Value per shareUSD 3.20

    90% of EV

    Forecast FCFF, final year
    USD 1.9bn
    Capex at depreciation, working capital in reinvestment
    USD 3.2bn
    Less reinvestment at g/ROIC (41.2% of NOPAT)
    USD -1.3bn
    Capitalised
    USD 1.9bn
    ROIC (WACC floor)
    6.1%
    Terminal value, undiscounted
    USD 53.3bn
    Terminal value, discounted
    USD 30.4bn
    Enterprise value
    USD 33.9bn
    Less net debt
    USD 26.5bn
    Equity value
    USD 7.4bn

    Exit at 12.2x EBITDA

    Value per shareUSD 9.19

    93% of EV

    Terminal value, undiscounted
    USD 77.5bn
    Terminal value, discounted
    USD 44.3bn
    Enterprise value
    USD 47.7bn
    Less net debt
    USD 26.5bn
    Equity value
    USD 21.2bn

    Spread between methods: 97%.

    Sensitivity

    Value per share (USD) by discount rate and long-run growth.

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    4.07%17.2618.9421.9228.0245.46
    5.07%8.057.847.687.627.73
    6.07%3.763.483.202.922.64
    7.07%0.940.710.480.250.02
    8.07%-1.15-1.34-1.53-1.72-1.91

    Outlined: this model. Green text: above today's price of 47.63. Shading: distance from this model's own value.

    Priced In

    What each input would have to be to justify the current price, one at a time.

    InputActualModelImplied
    Revenue growth, a year6.6%4.2%19.6%
    EBIT margin18.8%17.6%56.3%
    Discount rate-6.1%3.4%
    Download as Excel

    Live formulas, not pasted numbers - edit a driver and the workbook reprices.

    Yahoo Finance and RBA data. General information, not advice. Methodology.