Consolidated Edison (ED) Looks Fully Valued On A 18.6x P E
Consolidated Edison stock moves and business profile
Consolidated Edison (ED) has seen its share price move lower over the past week, month and past 3 months, with the stock last closing at US$108.85. That sits within a multi year period of positive total returns.
For investors, the key context is that Consolidated Edison operates regulated electric, gas and steam delivery businesses in New York and nearby regions, serving millions of customers across multiple networks.
See our latest analysis for Consolidated Edison.
Recent share price moves for Consolidated Edison have been softer in the short term, with the stock down over the past week and quarter. However, the year to date share price return of 8.86% and 5 year total shareholder return of 71.63% highlight a stronger longer term record. This pattern suggests that momentum has cooled recently as investors reassess the balance between regulated earnings stability and perceived risk.
If you are weighing Consolidated Edison against other opportunities in essential infrastructure, it can help to scan a broader universe of power grid and utility related businesses using the 35 power grid technology and infrastructure stocks
With Consolidated Edison shares easing off recent highs yet still showing firm multi year returns, the question is whether you pay up for perceived stability now or wait and hope for a cheaper entry. How does the current valuation stack up?
Price-to-Earnings of 18.6x for Consolidated Edison: Is it justified?
On a simple snapshot, Consolidated Edison trades on a P/E of 18.6x, which sits slightly below the broader US market but a touch above the global integrated utilities average.
The P/E multiple compares the current share price to the company’s earnings per share. For a regulated utility like Consolidated Edison, it is often used as a shorthand for how the market is weighing the stability of earnings against growth and risk.
Several data points frame this current 18.6x P/E. Consolidated Edison is viewed as good value against the US market P/E of 19.3x and also relative to an estimated fair P/E of 22x. This comparison indicates that the market’s valuation could potentially move closer to that fair ratio level if conditions align. At the same time, the stock is described as expensive against the global integrated utilities industry P/E of 18.2x. This signals that investors are paying a slight premium compared to sector peers and may be pricing in the company’s earnings quality, regulated profile and recent earnings growth.
In other words, the multiple sits in a narrow band around its reference points. It is cheaper than the wider US market and the estimated fair P/E, yet a little richer than the global industry average.
Explore the SWS fair ratio for Consolidated Edison
Result: Price-to-Earnings of 18.6x (ABOUT RIGHT)
However, Consolidated Edison still faces risks, such as changing regulatory decisions on allowed returns and potential cost overruns on large transmission and distribution projects.
Find out about the key risks to this Consolidated Edison narrative.
Another view on Consolidated Edison valuation
The P/E workup suggests Consolidated Edison looks roughly in line with what you might expect for a regulated utility. However, a separate check using the Simply Wall St DCF model points to a fair value of about $106.88 per share, which is slightly below the current $108.85 price.
This leaves the stock trading a little above that cash flow based estimate. For you as an investor, the question is whether the perceived earnings quality and stability are worth paying more than what the DCF model suggests.
Look into how the SWS DCF model arrives at its fair value.
Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Consolidated Edison for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 55 high quality undervalued stocks. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.
Next Steps
If this mix of solid history and recent pullback around Consolidated Edison leaves you unsure, now is a good time to review the numbers and recent news yourself, weigh the trade off between risks and potential rewards, and then check the 3 key rewards and 2 important warning signs
Looking for more investment ideas beyond Consolidated Edison?
Consolidated Edison offers one path, but your portfolio can benefit from a wider set of quality ideas. Use these focused screens so you do not miss potential standouts.
- Target dependable cash generators and use the 55 high quality undervalued stocks to spot companies where price and fundamentals may be out of sync.
- Strengthen your income stream by scanning the 9 dividend fortresses and zero in on businesses with higher yields and resilient profiles.
- Prioritise resilience and capital protection by reviewing the 81 resilient stocks with low risk scores and identify stocks with steadier risk scores.
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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com