FE earnings analysis
What we found in FE's 10-Q: the parts that mattered, the offsets in the same document, and what the company said about what comes next.
Our reading of the filing · Free to read, no account needed
FirstEnergy produced Q2 revenue of $3.678 billion, up 9% year over year, and GAAP EPS of $0.50, up from $0.46; however, operating margin declined to 18.4% from 19.1% and from 19.7% in Q1 2026. Transmission investment and formula-rate true-ups were the principal earnings drivers, with Stand-Alone Transmission earnings rising $22 million. The principal offset is weaker cash conversion: first-half operating cash flow fell to $1.137 billion while capital investments reached $2.600 billion, increasing reliance on financing amid regulatory and litigation uncertainties.
The parts that mattered.
Pulled out of the filing itself, with the figures the company reported.
- Revenue and GAAP EPS increased year over year
- Q2 revenue increased $298 million, or 9%, year over year to $3.678 billion. Earnings attributable to FE rose $20 million to $288 million, and GAAP diluted EPS increased to $0.50 from $0.46.
- Transmission delivered strongest earnings growth
- Stand-Alone Transmission earnings attributable to FE increased $22 million to $97 million, while segment revenue grew $88 million to $544 million, driven by regulated capital investment, rate-base growth and formula-rate true-ups.
- Integrated segment growth supported earnings
- Integrated segment revenue increased $173 million to $1.434 billion and earnings increased $7 million to $123 million. Transmission revenue within the segment rose $38 million to $149 million.
- Capital deployment remains elevated
- First-half capital investments totaled $2.600 billion, comprising $791 million in Distribution, $1.006 billion in Integrated, $750 million in Stand-Alone Transmission and $53 million in Corporate/Other, supporting the $36 billion 2026-2030 investment plan.
- Liquidity and covenant headroom remain solid
- Available liquidity was $4.884 billion as of July 27, 2026, including $4.812 billion of available revolving-credit capacity and $72 million of cash and cash equivalents. FE's interest-coverage ratio was approximately 4.2x versus its 2.50x minimum covenant.
- Ohio rate filing presents future earnings opportunity
- The Ohio Companies filed a three-year rate plan seeking base-distribution revenue increases of approximately $254 million in year one, $59 million in year two and $80 million in year three, with hearings beginning March 1, 2027.
And the other side of it.
The offsets in the same document — the things a summary that only listed the good news would have left out.
- Operating cash flow declined as investment increased
- Cash conversion weakened: first-half operating cash flow fell $582 million year over year to $1.137 billion, while investing cash outflow rose $414 million to $2.828 billion. The filing attributes the operating-cash decline to Ohio customer refunds, storm costs, Winter Storm Fern-related costs and working-capital timing.
- Working-capital deficit and short-term funding rose
- FirstEnergy had an approximately $2.7 billion working-capital deficit at June 30, 2026, and short-term borrowings increased to $1.376 billion from $325 million at December 31, 2025. FE also fully drew a $750 million term loan due April 27, 2027.
- New Jersey regulatory penalty exposure
- JCP&L faces a potential reliability penalty: NJBPU staff indicated it would recommend a $44 million penalty, and JCP&L states that a loss is probable but cannot estimate the final amount. JCP&L also carried approximately $80 million of ZEC refunds still owed to customers at June 30, 2026.
- ATSI ROE-incentive refund obligation
- ATSI's estimated obligation to refund its RTO-membership ROE incentive, including interest, totaled approximately $79 million at June 30, 2026. FERC directed removal of the 50-basis-point adder and refunds, with the refund deadline deferred to February 28, 2027.
- Maryland legislation threatens rate recovery
- The Maryland Utility RELIEF Act became effective July 1, 2026 and may affect PE's recovery timing, authorized returns, rate structure and investment planning. A related complaint seeks removal and refund of the 50-basis-point RTO ROE adder collected after July 1, 2026.
- No formal risk-factor update; litigation remains
- Risk-factor disclosure itself was unchanged: Item 1A states there was no material change from the December 31, 2025 Form 10-K. However, FE says it is probable it will incur losses in HB 6-related securities litigation, for which the loss amount or range remains unestimable.
What they reported.
What the company itself reported, taken out of the document.
- Earnings per share
- $0.5
- Gross margin
- 64.3%
- Operating margin
- 18.4%
- Segment
- Distribution revenue: $1.714 billion, up $39 million year over year
- Segment
- Integrated revenue: $1.434 billion, up $173 million year over year
- Segment
- Stand-Alone Transmission revenue: $544 million, up $88 million year over year
What they said about what is next.
The 10-Q contains no explicit consolidated numeric EPS or revenue guidance. Management discusses a $36 billion 2026-2030 Energize365 investment plan, expected annual common-equity issuance averaging approximately 1% of current market capitalization, and proposed regulatory rate actions, but these are not company earnings guidance.
The filing reads about the same as the one before it.
What came before.
- 10-Q · April 28, 2026
- FirstEnergy reported Q1 2026 consolidated revenue of $4,202 million, up $437 million or 12% versus Q1 2025, and GAAP earnings attributable to FE of $405 million, or $0.70 per share, up $45 million (13%) and $0.08 per…
This is our reading of a public filing, not the filing. Read the original on SEC.gov · Educational only. Nothing here is investment advice.
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