FirstEnergy (FE) Stock Faces Dividend Coverage Doubts Despite Data Center Growth

FirstEnergy stock slipped about 1% today, a muted reaction for a regulated utility that has been trading near the upper end of its recent range. The move understates the real tension in this quarter. The headline is not revenue or earnings per share; it is pressure on profitability at a time when investors already question how comfortably this balance sheet supports a premium P/E and a dividend that is not well covered by earnings.

Q2 core earnings per share landed at about 50 cents and net income was $288 million. Those figures keep the story on track, but they do little to ease concerns about margin and coverage strain.

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Q2 2026 Earnings Summary

• Revenue, Q2 2026 vs. Q2 2025: US$3,678 million vs. US$3,380 million (up about 8.8%)
• Net Income, Q2 2026 vs. Q2 2025: US$288 million vs. US$268 million (up about 7.5%)
• Basic EPS, Q2 2026 vs. Q2 2025: US$0.50 vs. US$0.46 (up about 7.3%)
• Trailing 12-Month Net Income, Q2 2026 vs. Q2 2025: US$1,085 million vs. US$1,308 million (down about 17.0%)

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FirstEnergy bull story leans on data center proof points

Bulls argue FirstEnergy offers a higher quality, more predictable growth profile anchored in Energize365 grid investment and rising data center load. Q2 gives some support. Weather adjusted total load grew 2% and industrial load grew 4%, with management directly tying that to AI and data center build. Contracted data center demand reached 6.4 GW, with total forecasted demand at about 25 GW and a system peak of 34.8 GW in July. That is a clear milestone for the “secular load growth” story. Execution on the capital plan is also on track, with US$2.9b deployed in the first half against a US$6b 2026 target and the US$36b five year plan reaffirmed. Core EPS of US$0.50 and full year guidance reaffirmation keep the earnings glide path intact, although year on year quarterly EPS is flat to slightly softer.

Bear case focuses on balance sheet strain and execution risk

The bearish view centers on whether heavy capex, legal and regulatory risk, and data center execution will stretch FirstEnergy’s balance sheet and compress returns. Q2 does not resolve these worries. Trailing 12 month net income of US$1.085b sits below the prior year’s US$1.308b even as capital deployment rises 19% year to date. That combination feeds the concern about thinner profitability against a larger asset base. Management reconfirmed US$36b of capex and flagged another roughly US$400m of projects tied to new data center contracts that sit outside the plan, with financing for future incremental projects potentially including 30% to 40% equity. That leaves dilution and dividend coverage as open questions. The small share price decline of about 1% on the day suggests the print did not fully disarm those fears.

Reveal where the surface looks calm while the street models start to diverge on FirstEnergy’s next few years. Access the full revenue, EPS and dividend path in the analyst estimates for FirstEnergy.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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