FirstEnergy Corp. and Pinnacle West Capital Corporation are two prominent players in the regulated electric utilities sector, each serving millions of customers with diverse energy generation portfolios. Their market overlap and strategic focus on integrating traditional and renewable energy sources make them compelling candidates for comparison. In this article, I will analyze their strengths and risks to help you decide which company offers the most promising investment opportunity.
Table of contents
Companies Overview
I will begin the comparison between FirstEnergy Corp. and Pinnacle West Capital Corporation by providing an overview of these two companies and their main differences.
FirstEnergy Corp. Overview
FirstEnergy Corp. operates in the regulated electric industry, generating, transmitting, and distributing electricity across multiple states including Ohio and Pennsylvania. The company maintains a diverse energy portfolio with coal, nuclear, hydroelectric, natural gas, wind, and solar facilities. Serving approximately 6 million customers, FirstEnergy is headquartered in Akron, Ohio, and focuses on maintaining extensive transmission and distribution infrastructure.
Pinnacle West Capital Corporation Overview
Pinnacle West Capital Corporation, through its subsidiary Arizona Public Service Company, provides electric services primarily in Arizona. It operates a range of generation facilities including coal, nuclear, gas, oil, and solar, with a regulated generation capacity of about 6,323 MW. The company serves around 1.3 million customers and manages a network of transmission and distribution lines, substations, and related infrastructure, with headquarters in Phoenix, Arizona.
Key similarities and differences
Both FirstEnergy and Pinnacle West operate in the regulated electric sector, focusing on electricity generation, transmission, and distribution with diversified energy sources including nuclear and solar. FirstEnergy serves a larger customer base and covers multiple states, whereas Pinnacle West operates primarily within Arizona with fewer customers. FirstEnergy manages significantly more extensive transmission and distribution lines, reflecting its broader geographic footprint compared to Pinnacle West’s more concentrated operations.
Income Statement Comparison
The table below compares key income statement metrics for FirstEnergy Corp. and Pinnacle West Capital Corporation for the fiscal year 2024, highlighting their financial scale and profitability.
| Metric | FirstEnergy Corp. (FE) | Pinnacle West Capital Corporation (PNW) |
|---|---|---|
| Market Cap | 25.8B | 10.7B |
| Revenue | 13.5B | 5.1B |
| EBITDA | 4.1B | 2.1B |
| EBIT | 2.5B | 1.1B |
| Net Income | 978M | 609M |
| EPS | 1.70 | 5.35 |
| Fiscal Year | 2024 | 2024 |
Income Statement Interpretations
FirstEnergy Corp.
FirstEnergy’s revenue showed steady growth from 10.8B in 2020 to 13.5B in 2024, a 24.86% increase overall, though net income slightly declined by 9.36% over the period. Gross and EBIT margins remained favorable, but net margin and EPS decreased in 2024. The recent year saw revenue growth slow to 4.68%, with net margin and EPS both contracting, signaling margin pressure.
Pinnacle West Capital Corporation
Pinnacle West’s revenue grew consistently from 3.59B in 2020 to 5.12B in 2024, an overall 42.88% rise, accompanied by a 10.58% net income increase. Gross and EBIT margins are favorable, with net margin also solid. In 2024, revenue growth accelerated to 9.13%, with net margin and EPS improving, reflecting stronger profitability and operational efficiency.
Which one has the stronger fundamentals?
Pinnacle West displays stronger fundamentals based on a higher proportion of favorable income statement metrics, including consistent revenue and net income growth, improved margins, and EPS gains. FirstEnergy, while showing solid revenue growth, faces declining net income and margin pressures, resulting in a less favorable overall income statement evaluation.
Financial Ratios Comparison
The table below compares key financial ratios for FirstEnergy Corp. (FE) and Pinnacle West Capital Corporation (PNW) as of fiscal year 2024, providing a snapshot of their profitability, liquidity, leverage, efficiency, and dividend metrics.
| Ratios | FirstEnergy Corp. (FE) | Pinnacle West Capital Corp. (PNW) |
|---|---|---|
| ROE | 7.85% | 9.01% |
| ROIC | 3.66% | 3.48% |
| P/E | 23.39 | 15.85 |
| P/B | 1.84 | 1.43 |
| Current Ratio | 0.56 | 0.59 |
| Quick Ratio | 0.45 | 0.42 |
| D/E | 1.95 | 1.64 |
| Debt-to-Assets | 46.63% | 42.33% |
| Interest Coverage | 2.35 | 2.68 |
| Asset Turnover | 0.26 | 0.20 |
| Fixed Asset Turnover | 0.33 | 0.25 |
| Payout ratio | 99.18% | 64.83% |
| Dividend yield | 4.24% | 4.09% |
Interpretation of the Ratios
FirstEnergy Corp.
FirstEnergy shows several unfavorable ratios, including return on equity (7.85%) and return on invested capital (3.66%), both below expectations, along with a weak current ratio of 0.56 indicating liquidity concerns. Asset turnover ratios are also low, signaling inefficiency. The company pays dividends, with a favorable dividend yield of 4.24%, but investors should monitor payout sustainability given mixed cash flow coverage.
Pinnacle West Capital Corporation
Pinnacle West presents a stronger net margin at 11.88% but shares weaknesses with FirstEnergy in return on equity (9.01%) and return on invested capital (3.48%). Liquidity ratios remain unfavorable, and asset turnover is low. The dividend yield of 4.09% is attractive, supported by moderate payout metrics. However, risks persist from leverage and operational efficiency challenges.
Which one has the best ratios?
Both companies face significant challenges with liquidity and operational efficiency, reflected in unfavorable asset turnover and leverage ratios. Pinnacle West’s higher net margin and more favorable price-to-book ratio provide some advantages, while FirstEnergy’s dividend yield is slightly higher. Overall, both exhibit a slightly unfavorable ratio profile, requiring careful consideration.
Strategic Positioning
This section compares the strategic positioning of FirstEnergy Corp. and Pinnacle West Capital Corporation, focusing on Market position, Key segments, and Exposure to technological disruption:
FirstEnergy Corp.
- Larger market cap at 25.8B, serving 6M customers across multiple states, facing broad competitive pressures.
- Revenue driven mainly by regulated distribution (~6.9B in 2024) and transmission (~1.8B), diversified generation assets including coal, nuclear, hydro, gas, wind, solar.
- Exposure to technology disruption moderate, with mixed generation portfolio including renewables, but no specific disruption data provided.
Pinnacle West Capital Corporation
- Smaller market cap at 10.7B, serving 1.3M customers primarily in Arizona, with localized competitive environment.
- Revenue concentrated in electric service (~2.56B in 2024), transmission, and wholesale energy with coal, nuclear, gas, oil, solar facilities.
- Exposure to technology disruption moderate, with regulated generation including solar, but no explicit information on disruption impact.
FirstEnergy Corp. vs Pinnacle West Capital Corporation Positioning
FirstEnergy shows a more diversified geographic and generation mix, serving multiple states with various energy sources, while Pinnacle West has a more concentrated market focused in Arizona. FirstEnergy’s broader scale contrasts with Pinnacle West’s regional focus, reflecting differences in revenue scale and customer base.
Which has the best competitive advantage?
Both companies exhibit declining ROIC trends below WACC, indicating value destruction and weak competitive moats. Neither currently demonstrates a sustainable competitive advantage based on their economic profit metrics.
Stock Comparison
The stock price chart highlights notable bullish trends with decelerating momentum for both FirstEnergy Corp. (FE) and Pinnacle West Capital Corporation (PNW) over the past 12 months, punctuated by recent negative short-term corrections.
Trend Analysis
FirstEnergy Corp. (FE) exhibited a 19.42% price increase over the past year, indicating a bullish trend with decelerating momentum. The stock reached a high of 47.72 and a low of 36.5, with moderate volatility (std deviation 2.64). Recently, FE showed a slight bearish correction (-4.27%).
Pinnacle West Capital Corporation (PNW) recorded a 31.14% price gain over the last 12 months, reflecting a bullish trend also experiencing deceleration. The stock’s highest price was 94.45 and the lowest 67.92, with higher volatility (std deviation 6.87). Its recent short-term trend was bearish with a -3.31% decline.
Comparing the two, PNW delivered the higher market performance over the analyzed period, outperforming FE by nearly 12 percentage points despite both showing similar recent short-term declines.
Target Prices
Analysts provide a clear consensus on target prices for FirstEnergy Corp. and Pinnacle West Capital Corporation.
| Company | Target High | Target Low | Consensus |
|---|---|---|---|
| FirstEnergy Corp. | 54 | 46 | 49.29 |
| Pinnacle West Capital Corporation | 115 | 85 | 96.33 |
The consensus target prices for both utilities show upside potential compared to their current prices of 44.65 for FirstEnergy and 89.07 for Pinnacle West. This suggests moderate to strong analyst confidence in future appreciation.
Analyst Opinions Comparison
This section compares analysts’ ratings and grades for FirstEnergy Corp. and Pinnacle West Capital Corporation:
Rating Comparison
FE Rating
- Rated B, considered very favorable overall by analysts.
- Discounted Cash Flow Score: 4, indicating a favorable valuation based on cash flow projections.
- Return on Equity Score: 4, showing strong efficiency in generating profit from equity.
- Return on Assets Score: 3, reflecting moderate effectiveness in using assets.
- Debt To Equity Score: 1, flagged as very unfavorable, indicating higher financial risk.
- Overall Score: 3, a moderate overall financial standing.
PNW Rating
- Rated C+, also considered very favorable overall by analysts.
- Discounted Cash Flow Score: 1, indicating a very unfavorable valuation.
- Return on Equity Score: 3, a moderate efficiency in profit generation.
- Return on Assets Score: 3, also reflecting moderate asset utilization.
- Debt To Equity Score: 1, similarly very unfavorable, indicating financial risk.
- Overall Score: 2, slightly lower moderate overall financial standing.
Which one is the best rated?
Based strictly on the provided data, FE holds a higher overall rating (B vs. C+) and stronger scores in discounted cash flow and return on equity. Both have equal low debt-to-equity scores, indicating similar financial risk levels.
Scores Comparison
Here is a comparison of the Altman Z-Score and Piotroski Score for FirstEnergy Corp. and Pinnacle West Capital Corporation:
FE Scores
- Altman Z-Score: 0.78, indicating financial distress
- Piotroski Score: 6, reflecting average financial strength
PNW Scores
- Altman Z-Score: 0.73, indicating financial distress
- Piotroski Score: 4, reflecting average financial strength
Which company has the best scores?
Both FE and PNW are in the Altman Z-Score distress zone, signaling high bankruptcy risk. FE has a higher Piotroski Score (6 vs. 4), suggesting relatively stronger financial health.
Grades Comparison
Here is a comparison of the latest grades for FirstEnergy Corp. and Pinnacle West Capital Corporation from recognized grading companies:
FirstEnergy Corp. Grades
This table summarizes the recent grades assigned to FirstEnergy Corp. by various grading companies.
| Grading Company | Action | New Grade | Date |
|---|---|---|---|
| UBS | Maintain | Neutral | 2025-12-17 |
| Mizuho | Maintain | Neutral | 2025-10-24 |
| Scotiabank | Maintain | Sector Outperform | 2025-10-24 |
| UBS | Maintain | Neutral | 2025-10-24 |
| Morgan Stanley | Maintain | Overweight | 2025-10-21 |
| Jefferies | Maintain | Hold | 2025-10-21 |
| Keybanc | Downgrade | Sector Weight | 2025-10-15 |
| Scotiabank | Maintain | Sector Outperform | 2025-10-06 |
| Morgan Stanley | Maintain | Overweight | 2025-09-25 |
| Barclays | Upgrade | Overweight | 2025-08-25 |
Overall, FirstEnergy Corp.’s grades show a predominance of neutral to overweight ratings, with several maintain actions and a few upgrades and downgrades reflecting a stable to cautiously positive outlook.
Pinnacle West Capital Corporation Grades
This table shows the latest grades given to Pinnacle West Capital Corporation by established grading firms.
| Grading Company | Action | New Grade | Date |
|---|---|---|---|
| UBS | Maintain | Neutral | 2025-12-17 |
| Keybanc | Downgrade | Sector Weight | 2025-12-12 |
| Keybanc | Maintain | Overweight | 2025-10-15 |
| UBS | Maintain | Neutral | 2025-10-10 |
| Barclays | Maintain | Equal Weight | 2025-10-07 |
| Argus Research | Maintain | Buy | 2025-09-30 |
| Morgan Stanley | Maintain | Equal Weight | 2025-09-25 |
| UBS | Maintain | Neutral | 2025-09-12 |
| Mizuho | Downgrade | Neutral | 2025-09-09 |
| Barclays | Maintain | Equal Weight | 2025-08-13 |
The grading trend for Pinnacle West Capital Corporation is mixed, with several neutral and equal weight ratings, some downgrades, and a few buy and overweight grades, indicating a cautious to balanced market perception.
Which company has the best grades?
Both companies have a consensus rating of “Hold,” but FirstEnergy Corp. has a higher number of overweight and sector outperform grades compared to Pinnacle West Capital Corporation, which shows more neutral and equal weight ratings. This difference may influence investors’ risk assessments and portfolio weighting decisions.
Strengths and Weaknesses
Below is a comparison table highlighting the strengths and weaknesses of FirstEnergy Corp. (FE) and Pinnacle West Capital Corporation (PNW) based on the most recent data from 2024.
| Criterion | FirstEnergy Corp. (FE) | Pinnacle West Capital Corporation (PNW) |
|---|---|---|
| Diversification | Focused on regulated distribution and transmission segments; limited diversification beyond core electric utility services | Primarily electric service with some transmission and wholesale energy; moderate diversification in energy services |
| Profitability | Net margin 7.26% (neutral), ROE 7.85% (unfavorable), ROIC 3.66% (unfavorable); company is shedding value with declining ROIC | Net margin 11.88% (favorable), ROE 9.01% (unfavorable), ROIC 3.48% (unfavorable); also shedding value but with stronger net margin |
| Innovation | Limited evidence of innovation focus; traditional utility model with regulated operations | Similar traditional utility operations; innovation initiatives unclear, moderate focus on wholesale energy |
| Global presence | Primarily US-focused regulated markets; no significant international presence | US regional focus; no meaningful global operations |
| Market Share | Large regulated distribution segment with $6.86B revenue in 2024; stable market position in regulated utility | Smaller scale with $2.56B in electric service revenue; regional market presence but less dominant |
Key takeaways: Both FE and PNW operate predominantly in regulated US electric utilities with limited diversification and minimal global exposure. Profitability metrics indicate both companies are currently shedding value with declining returns on invested capital. PNW shows a slightly better net margin and revenue diversification, but both face challenges in innovation and financial efficiency. Caution is advised given their unfavorable ROIC trends.
Risk Analysis
Below is a comparative table of key risks for FirstEnergy Corp. (FE) and Pinnacle West Capital Corporation (PNW) based on the most recent 2024 data:
| Metric | FirstEnergy Corp. (FE) | Pinnacle West Capital Corporation (PNW) |
|---|---|---|
| Market Risk | Beta 0.63 (moderate volatility) | Beta 0.54 (lower volatility) |
| Debt level | High debt-to-equity (1.95), very unfavorable rating | Elevated debt-to-equity (1.64), very unfavorable rating |
| Regulatory Risk | Exposure to multi-state regulations, potential shifts in energy policies | Primarily Arizona-focused, regulatory changes in state energy policies |
| Operational Risk | Large, diverse generation fleet; aging coal/nuclear assets require careful management | Concentrated regional operations, reliance on regulated generation |
| Environmental Risk | Coal and nuclear assets pose transition and compliance risks | Similar fossil fuel exposure; growing solar reduces risk somewhat |
| Geopolitical Risk | Limited direct exposure, but energy supply chain disruptions possible | Limited direct exposure; regional stability critical for operations |
In synthesis, both companies face significant debt-related risks with very unfavorable debt-to-equity profiles, increasing financial vulnerability. FirstEnergy’s broader geographic and generation mix exposes it to higher regulatory and operational complexity, while Pinnacle West’s regional focus concentrates its regulatory risk. Environmental risks remain notable due to legacy fossil fuel assets, with transition pressures mounting. Both firms’ Altman Z-Scores place them in a distress zone, signaling caution for investors prioritizing financial stability.
Which Stock to Choose?
FirstEnergy Corp. (FE) shows a mixed income evolution with a favorable gross and EBIT margin but an overall unfavorable income statement due to declining net margin and EPS. Financial ratios reveal mostly unfavorable metrics, especially in leverage and liquidity, while profitability is modest and debt levels are high. The company holds a very favorable rating of B with a moderate overall score but faces significant value destruction evidenced by declining ROIC below WACC.
Pinnacle West Capital Corporation (PNW) presents a favorable income evolution with strong growth in revenue, EBIT, net income, and EPS, despite a slight net margin decline. Its financial ratios are slightly better balanced, with more favorable profitability and valuation ratios, though debt and liquidity remain concerns. The company also has a very favorable rating of C+ with a moderate overall score but similarly struggles with value destruction indicated by a declining ROIC below WACC.
Investors prioritizing growth and income stability might view Pinnacle West’s favorable income statement and stronger profitability as more attractive, while those focused on dividend yield and established market presence could consider FirstEnergy’s consistent margins and higher rating. Both companies exhibit challenges in value creation and financial health, suggesting a cautious approach aligned with risk tolerance and investment strategy.
Disclaimer: Investment carries a risk of loss of initial capital. The past performance is not a reliable indicator of future results. Be sure to understand risks before making an investment decision.
Go Further
I encourage you to read the complete analyses of FirstEnergy Corp. and Pinnacle West Capital Corporation to enhance your investment decisions:
