FirstEnergy Corp. (FE): Number Crunching

Its debt-to-equity ratio currently clocks in at 1.6, below the industry’s 2.2 average but significantly higher than the likes of Exelon’s 0.94 ratio.

The utility is also taking a page of out NextEra Energy, Inc. (NYSE:NEE)‘s book through its planned sale of 1,240 MW of hydro assets by 2014. NextEra offloaded its final 351 MW of hydro assets in March, enabling the company to focus on “areas with greater growth potential.” FirstEnergy’s and NextEra Energy, Inc. (NYSE:NEE)’s exits are hardly anomalies, as various utilities concentrate their assets to cut costs and maximize economies of scale.

Can FirstEnergy finish first?
FirstEnergy share prices are up just 2.75% for 2013, compared with a 14.16% rise for the Dow Jones U.S. Utilities Index. With only 6% natural gas capacity, this utility’s generation portfolio is well protected from gas-price increases. And although this dividend stock offers a 5.1% yield, a heavy payout won’t do its book-balancing any favors.

Despite FirstEnergy’s positive earnings report, its share price currently places this utility out of my investment comfort zone. Looking ahead, investors should keep an extra close watch on margins. If FirstEnergy can keep costs lower as its booming customer base demands more electricity, its priced-for-perfection shares may match my expectations.

The article FirstEnergy Earnings: Will Debt Destroy This Dividend Stock? originally appeared on Fool.com is written by Justin Loiseau.

Motley Fool contributor Justin Loiseau has no position in any stocks mentioned, but he does use electricity. You can follow him on Twitter, @TMFJLo, and on Motley Fool CAPS, @TMFJLo.The Motley Fool recommends Exelon.

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