Morningstar

FirstEnergy Appoints Former AEP Executive as CEO

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Securities In This Article
FirstEnergy Corp
(FE)

We are reaffirming our $40 per share fair value estimate after FirstEnergy FE recently announced that utility veteran Brian Tierney would become CEO effective June 1. Our narrow moat and stable moat trend remain unchanged.

Overall, we think Tierney’s selection is a solid choice. Prior to his current role as head of portfolio operations and asset management for Blackstone, Tierney worked for 23 years at American Electric Power. During his time at AEP, Tierney served 11 years as its CFO. In that role, we think he did a good job setting and achieving financial goals with clear communication to the financial community.

Before his time as CFO at AEP, Tierney served as executive vice president of AEP Utilities East, which included AEP’s Ohio service territory. Tierney will need to leverage his experience in the state to mend regulatory relationships after FirstEnergy’s bribery scandal.

The announcement ends a lengthy search after CEO Steven Strah unexpectedly retired in September 2022. John Somerhalder, chair of the board of directors, has served as interim CEO. Somerhalder has served shareholders well, with notable achievements including continuing to manage the regulatory relationships and executing on an additional 30% sale of FirstEnergy Transmission to Brookfield Infrastructure Partners.

We expect FirstEnergy to continue focusing on achieving its 6% to 8% annual earnings growth target through 2025. We expect the company to achieve the lower end of that range supported by $19 billion in capital investment. We expect the company to resume dividend growth later this year, in line with our estimate for 2.6% annual average growth.

The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar’s editorial policies.

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About the Author

Andrew Bischof, CFA

Strategist
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Andrew Bischof, CFA, CPA, is a strategist, AM Resources, for Morningstar*. He covers electric, gas and water utilities. He conducts comprehensive research and analysis on his covered companies to provide insights into investment opportunities. He assesses financial statements, competitive advantages, and economic indicators to determine a stock’s intrinsic value. He is a five-time Morningstar Outstanding Research Achievement award winner, which recognizes thought leadership and equity research quality as voted on by senior management.

Before joining Morningstar in 2011, Bischof worked in treasury for Mead Johnson Nutrition. Previously, He was a group audit officer for Bank of America in Chicago, and before that, an auditor for Ernst & Young.

Bischof holds a bachelor’s degree in business administration and accounting and a master’s degree in accounting from the University of Wisconsin. He also holds a master’s degree in business administration, with a concentration in finance, from Indiana University’s Kelley School of Business. Additionally, he holds the Chartered Financial Analyst® and Certified Public Accountant designations.

* Morningstar Research Services LLC (“Morningstar”) is a wholly owned subsidiary of Morningstar, Inc

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