How Consolidated Edison Stock Has Been Performing

Consolidated Edison (ED) has been relatively stable recently, with a 1 day return of 2.4% and a past week gain of 1.1%, while the month showed a 1.5% decline.

Looking a bit longer, the stock shows a 4.6% return over the past 3 months and 11.5% year to date, with a 2.4% total return over the past year, 25.4% over 3 years, and 70.8% over 5 years.

At a share price of $111.49, Consolidated Edison has seen short term share price momentum pick up recently, while longer term total shareholder returns over 3 and 5 years point to steady compounding rather than rapid swings in sentiment.

If this kind of regulated utility profile appeals to you, it can also be useful to see what is happening elsewhere in the power and grid space, starting with our focused list of 35 power grid technology and infrastructure stocks

With Consolidated Edison trading at $111.49 and sitting almost exactly in line with analyst targets and intrinsic value estimates, the key question for you is whether there is still an opportunity here or if the market is already fully reflecting its outlook in the current price.

Price-to-Earnings of 20.3x: Is it justified?

On a P/E of 20.3x, Consolidated Edison sits slightly below the average for its closest US integrated utilities peers at 21x, while standing above the wider global integrated utilities average of 19x. With the share price at $111.49, that puts the stock on a valuation that is neither extremely cheap nor extremely stretched within its sector.

The P/E ratio compares the current share price to earnings per share and is a quick way to see how much investors are paying for each dollar of earnings. For a regulated utility like Consolidated Edison, where growth expectations are usually steadier than in high growth sectors, the P/E often reflects how confident investors are in the durability of those earnings.

Here, the market is assigning a P/E that is slightly lower than the peer group average yet higher than the global sector. That suggests investors are not pricing the company at a discount across the board, but are also not assigning a premium within its immediate US peer set. Compared with the estimated fair P/E of 23.6x, the current multiple is also below a level that quantitative models suggest the market could move toward if sentiment or earnings expectations shift.

Result: Price-to-Earnings of 20.3x (ABOUT RIGHT)

However, you still need to watch for regulatory shifts that could affect allowed returns, as well as any large capital projects that might pressure earnings or require fresh funding.

Another View: Cash Flows Tell a Slightly Different Story

The P/E of 20.3x suggests Consolidated Edison is reasonably priced, but the SWS DCF model points to a fair value of about $106.50 per share, which is below the current $111.49. That implies the stock is trading at a premium to its modeled future cash flows.

So while earnings based metrics look fairly comfortable, the cash flow view hints at less room for error in assumptions about future profitability and investment needs. The question for you is which lens you trust more when the signals do not fully line up.

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 51 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

Given the mixed signals on value and sentiment, this is a good moment to look under the hood yourself and decide how comfortable you are with the balance of risks and rewards. To help with that, take a close look at the 3 key rewards and 3 important warning signs

Ready to hunt for more investment ideas?

If Consolidated Edison is on your radar, it is worth widening your field of vision so you do not miss opportunities sitting in plain sight.

• Target resilient income by checking out 12 dividend fortresses that aim to pair higher yields with stable business models.
• Seek potential value opportunities by scanning screener containing 25 high quality undiscovered gems that many investors may not be watching yet.
• Prioritise capital preservation by reviewing 74 resilient stocks with low risk scores that score well on financial strength and volatility.

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.