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Edison International (EIX): Evaluating Valuation as Debt Concerns Intensify Despite Ongoing Dividend Payouts

Simply Wall St · 08/31 10:18
If you are watching Edison International (EIX), you probably noticed the new round of preferred and trust preference dividends just announced by the board. On the surface, recurring payouts signal financial stability; however, the news has taken on more weight as it arrives alongside increasing market chatter about EIX’s heavy debt load and deteriorating financial metrics. Concerns about rising net debt, weak interest coverage, and ongoing struggles to convert profits into real cash have sharpened the spotlight on how safe those dividends truly are. In the bigger picture, these issues are arising at a time when EIX’s share price has faced a challenging run. The stock is down 32% over the past year, wiping out much of its long-term momentum, though five-year returns still sit solidly in positive territory. Recent months show modest gains, but mixed headlines around the balance sheet have weighed on sentiment, especially as the company posts tepid annual revenue growth and even a slight dip in net income. After a year of pressure and shifting risk perception, investors are left with a tricky question: is EIX’s current price a buying opportunity for the long haul, or is the market right to keep discounting future growth?

Most Popular Narrative: 15.2% Undervalued

According to community narrative, Edison International is viewed as undervalued by analysts, based on forward-looking growth and risks. They estimate a fair value that sits substantially higher than the current share price, implying meaningful upside potential.

Significant state and federal investment, along with policy momentum for decarbonization, is expected to support large-scale grid modernization and renewable energy integration projects. This could provide Edison International with stable, above-inflation capital expenditure opportunities and expand its regulated rate base, which would support earnings and rate base-driven revenue growth.

The story behind this valuation may surprise you. Want to uncover the assumptions that produced such a bullish price target? The analysts behind this narrative used key financial projections and factored in transformative industry shifts to inform their estimate. See what is driving their analysis and take a closer look at the fundamental drivers of this undervaluation.

Result: Fair Value of $66.23 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts. However, escalating wildfire liabilities or regulatory setbacks could reshape the outlook. These factors pose real threats to earnings and dividend security in the coming years. Find out about the key risks to this Edison International narrative.

Another View: Discounted Cash Flow Raises Doubts

While the analyst consensus sees Edison International as undervalued, our DCF model paints a different picture. This approach suggests the stock may be trading above its fair value, which calls the bullish case into question. Which narrative stands up to scrutiny?

Look into how the SWS DCF model arrives at its fair value.

EIX Discounted Cash Flow as at Aug 2025
EIX Discounted Cash Flow as at Aug 2025

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Edison International 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 undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Edison International Narrative

If you see things differently or want to reach your own conclusions, you can dive into the numbers and craft your own perspective in just minutes. Do it your way.

A great starting point for your Edison International research is our analysis highlighting 3 key rewards and 4 important warning signs that could impact your investment decision.

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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.