• Wondering if Edison International is fairly priced at around US$68.80, or if the market is missing something about this utility stock's potential value.
• The stock recently closed at US$68.80, with returns of 1.3% over 7 days, a 6.5% decline over 30 days, 12.9% year to date, 30.7% over 1 year, 7.5% over 3 years and 53.4% over 5 years, giving you a mixed picture to interpret.
• Recent attention on Edison International has focused on how the company fits into the broader US utilities sector and what that means for its risk profile and long term role in the power grid. This context helps explain why investors may be reassessing both the stock's growth potential and its perceived stability.
• Edison International currently has a valuation score of 3/6

Approach 1: Edison International Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow model takes expected future cash flows and then discounts them back to today to estimate what the whole business might be worth right now.

For Edison International, the model used is a 2 Stage Free Cash Flow to Equity approach based on cash flow projections in $. The latest twelve month free cash flow is a loss of $565.65 million. Analysts and extrapolated estimates suggest free cash flow moving to $694 million by 2030, with intermediate years ranging from $297.50 million to $1,445 million, and one projected year showing a free cash flow loss of $95 million.

These annual figures are discounted back to today, including extrapolated projections beyond the analyst horizon, to arrive at an estimated intrinsic value of about $37.15 per share. Compared with a recent share price of US$68.80, this DCF output indicates the stock is around 85.2% above this estimated value based on these assumptions.

Result: OVERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Edison International may be overvalued by 85.2%. Discover 44 high quality undervalued stocks or create your own screener to find better value opportunities.

Approach 2: Edison International Price vs Earnings

P/E is a useful way to look at profitable companies because it directly links what you pay for the stock to the earnings generated per share. In simple terms, the higher the expected growth and the lower the perceived risk, the more investors are usually willing to pay in the form of a higher P/E ratio.

Edison International currently trades on a P/E of 7.45x. That sits well below the Electric Utilities industry average of 21.65x and the peer average of 19.01x, which might initially make the stock look inexpensive compared with many other utilities.

Simply Wall St’s Fair Ratio for Edison International is 19.00x. This is a proprietary estimate of what a more “normal” P/E might be, based on factors such as the company’s earnings growth profile, profit margins, industry, market cap and specific risks. Because it blends these company specific drivers instead of just copying what peers or the wider industry trade on, it can give you a more tailored reference point.

Comparing Edison International’s current P/E of 7.45x with the Fair Ratio of 19.00x suggests the stock is trading below this company specific reference level.

Result: UNDERVALUED

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Upgrade Your Decision Making: Choose your Edison International Narrative

Earlier it was mentioned that there is an even better way to understand valuation, so Narratives are introduced here as a simple way for you to attach a clear story to your numbers. You set your own fair value and expectations for Edison International’s future revenue, earnings and margins, then see how that story translates into a valuation that you can compare with the live share price.

A Narrative on Simply Wall St’s Community page links three things: what you believe is happening with the business, the forecast that follows from that view, and the fair value estimate that drops out of those assumptions. This way you can quickly see whether your outlook implies the stock is priced above or below what you think it is worth at today’s level.

Because Narratives on the platform update when new information comes in, such as wildfire reform headlines, new earnings guidance or fresh analyst targets, your fair value view stays in sync with the latest data instead of being a static spreadsheet you built months ago.

For Edison International, one investor on the Community page might align with a more optimistic Narrative that uses a fair value near US$82.90 based on higher revenue growth and a P/E around 15x. Another might lean toward a more cautious Narrative closer to US$55.80 with flatter revenue assumptions and a lower future P/E near 11x. Comparing each of these to the current share price can help you decide whether the stock fits your own story or not.

For Edison International, here are previews of two leading Edison International Narratives to make comparison easier:

Fair value in this bullish narrative: US$74.19 per share.

Implied discount to that fair value at the recent US$68.80 share price: about 7.3% undervalued.

Revenue growth used in this narrative: 1.91% a year.

• Assumes steady grid demand supported by electrification policies, long-term capital investment in modernization and renewables, and population-driven electricity needs in Southern California.
• Builds in a regulatory backdrop where wildfire cost recovery mechanisms and rate decisions support earnings visibility, cash flows and dividend capacity despite known risks.
• Treats wildfire liabilities, high capex requirements and climate volatility as key threats that could still pressure free cash flow and returns if they move against expectations.

Fair value in this bearish narrative: US$55.80 per share.

Implied premium to that fair value at the recent US$68.80 share price: about 23.3% overvalued.

Revenue growth used in this narrative: 0.39% a year.

• Frames distributed energy resources such as rooftop solar and storage, high capital needs and policy uncertainty as headwinds that could leave revenue growth and margins under pressure.
• Emphasizes wildfire litigation and potential future fire events as persistent overhangs that may raise insurance, compliance and financing costs.
• Assumes flatter revenue, lower margins and a lower future P/E multiple than consensus, which together point to a fair value meaningfully below the current share price in this scenario.

If you want to look beyond these previews and see how different earnings paths, wildfire outcomes and rate decisions feed into the valuation, you can review the full range of Edison International Community Narratives, including other bullish, bearish and blended cases that may be closer to your own view.

To see how these results tie into long-term growth, risks, and valuation, check out the full range of community narratives for Edison International on Simply Wall St. Add the company to your watchlist or portfolio so you'll be alerted when the story evolves.

Do you think there's more to the story for Edison International? 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.