FirstEnergy (FE) stock has soared more than 15% in the last three months, significantly outperforming broader utilities (XLU). Investment from activist hedge fund Elliott Management and improved earnings growth prospects boosted FE stock, which is currently trading at an EV-to-EBITDA (enterprise value to earnings before interest, tax, depreciation, and amortization) ratio of 8.4x, lower than its five-year average of ~9.0x.
In comparison, the largest US competitive utility, Exelon (EXC), is currently trading at an EV-to-EBITDA ratio of ~8x, higher than its five-year historical average of ~7x. Public Service Enterprise Group (PEG) stock, which looks expensive compared to peers, is trading at a valuation ratio of 11.2x, higher than its five-year average of 9x. For more peer comparison, read NextEra Energy and Dominion Energy: How Do They Stack Up?