Is Consolidated Edison (ED) Fairly Priced After Recent Utilities Sector Focus On Stability?

• If you are wondering whether Consolidated Edison is fairly priced at its current level, this article walks through how its stock stacks up on value.
• The share price recently closed at US$111.01, with returns of 6.9% over 30 days, 11.0% year to date, 13.6% over 1 year, 37.7% over 3 years and 97.4% over 5 years, which may influence how you think about both its growth potential and risk profile.
• Recent news around utilities has kept investor attention on income stability, regulation and long term infrastructure investment. Consolidated Edison often features in that conversation as a large, established name in the sector. This backdrop helps frame how investors might be reassessing what they are willing to pay for the stock relative to its perceived reliability.
• On our valuation checks, Consolidated Edison scores 2 out of 6 for being undervalued, giving it a valuation score of 2. Next we will look at the usual valuation approaches before finishing with a way to interpret the numbers that can give you an even clearer picture of value.

Consolidated Edison scores just 2/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: Consolidated Edison Dividend Discount Model (DDM) Analysis

The Dividend Discount Model estimates what a stock might be worth by projecting future dividends and discounting them back to today. In this framework, you are effectively valuing Consolidated Edison on the cash it returns to shareholders over time.

For Consolidated Edison, the model uses a current dividend per share of US$3.76, a return on equity of 8.58% and a payout ratio of 58.21%. That payout indicates just over half of earnings are being paid out as dividends, with the rest retained in the business. The model applies an expected long term dividend growth rate of 3.59%, which is capped in the DDM at 3.41%.

Using these inputs, the DDM produces an estimated intrinsic value of US$105.41 per share. Compared with the recent share price of US$111.01, this suggests the stock is about 5.3% overvalued on this dividend-based approach, which is a fairly small gap and not a clear mismatch between price and value.

Result: ABOUT RIGHT

Consolidated Edison is fairly valued according to our Dividend Discount Model (DDM), but this can change at a moment's notice. Track the value in your watchlist or portfolio and be alerted on when to act.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Consolidated Edison.

Approach 2: Consolidated Edison Price vs Earnings

For a profitable company like Consolidated Edison, the P/E ratio is a useful way to see what investors are currently willing to pay for each dollar of earnings. It ties directly to the bottom line and gives you a simple handle on how the market is pricing the business today.

What counts as a “normal” P/E depends on how the market views a company’s growth prospects and risk. Higher expected growth or lower perceived risk can support a higher multiple, while slower growth or higher risk tends to justify a lower one. Consolidated Edison is trading on a P/E of 19.82x, compared with the Integrated Utilities industry average of 19.09x and a peer average of 21.09x.

Simply Wall St also calculates a proprietary “Fair Ratio” of 23.11x for Consolidated Edison. This goes beyond simple peer or industry comparisons by incorporating factors such as earnings growth, risks, profit margins, industry and market cap into a single benchmark. Against this Fair Ratio, the current P/E of 19.82x is lower, which indicates the shares are priced below what this framework suggests could be reasonable.

Result: UNDERVALUED

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Upgrade Your Decision Making: Choose your Consolidated Edison Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives. Simply Wall St hosts these on its Community page and they are used by millions of investors to connect the story they believe about a company with a clear financial forecast and a fair value estimate.

A Narrative is your short, plain language view of Consolidated Edison, backed up by specific assumptions for future revenue, earnings and margins. The platform then turns these assumptions into projected cash flows, a fair value and an easy comparison with the current share price so you can see whether the stock looks expensive or cheap to you.

Because Narratives on Simply Wall St update automatically when new news, earnings or other key data is added, your fair value view stays current without you needing to rebuild models. You can also see at a glance whether the gap between your Fair Value and the live market price is wide enough to consider buying, holding or selling.

For example, two Consolidated Edison Narratives might sit at opposite ends of the range. One investor might assume a relatively low fair value based on cautious forecasts, while another assumes a much higher fair value based on more optimistic assumptions about future revenue and margins.

Do you think there's more to the story for Consolidated Edison? Head over to our Community to see what others are saying!

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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