Is Consolidated Edison (ED) Cheap On A Flat Share Price And Modest Valuation Gap?

Consolidated Edison (ED) has drawn fresh attention after recent price moves left the utility’s shares roughly flat over the past month and past 3 months, despite double digit 1 year total return.

Short term, momentum in Consolidated Edison’s share price has cooled, with the stock edging lower over the past week and month. The year to date share price return of 7.3% sits alongside a 1 year total shareholder return of 14.3%, which reflects stronger gains for longer term holders.

Scan how Consolidated Edison stacks up against other grid and infrastructure plays by reviewing the hand picked 39 power grid technology and infrastructure stocks that is shaping the future of energy reliability.

For a regulated utility like Consolidated Edison, a 14.3% 1 year total return can look like most of the juice is already squeezed. Given the recent pause in the share price, does the current valuation still suggest more upside, or has the easy money already been made?

Price-to-Earnings of 17.9x: Is it justified?

On the latest figures, Consolidated Edison trades on a P/E of 17.9x, which screens as slightly cheap compared with both peers and the wider integrated utilities group.

The P/E ratio links the current share price to annual earnings per share. For a regulated utility such as Consolidated Edison, this metric is often a shorthand for what investors are willing to pay for a steady earnings profile that tends to move more slowly than high growth sectors.

Here, the market is assigning a lower earnings multiple than the peer average of 19.8x and the global integrated utilities level of 18.3x. Against an estimated fair P/E of 21.3x, the current ratio also sits below the level our fair value model suggests the market could eventually lean toward if expectations remain intact.

For investors comparing regulated power and gas distributors, that gap implies the stock is priced at a discount to both similar businesses and the modelled fair earnings multiple, without straying into bargain territory that usually signals aggressive growth assumptions or severe market scepticism.

Explore the SWS fair ratio for Consolidated Edison.

Result: Price-to-Earnings of 17.9x (UNDERVALUED)

Still, Consolidated Edison faces potential pressure if regulated returns are reset less favourably or if project spending runs ahead of what regulators allow into bills.

Find out about the key risks to this Consolidated Edison narrative.

Another View on Consolidated Edison’s Valuation

Consolidated Edison looks modestly cheap on a P/E basis, yet the SWS DCF model tells a more muted story. At $107.29, the shares sit just below an estimated future cash flow value of $107.65, which points to only a small margin of undervaluation. Could that thin gap close quickly if expectations shift?

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 49 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

Unsure whether the current mood around Consolidated Edison feels too upbeat or too cautious? Move fast, check the underlying numbers, weigh both the concerns and the potential upside, and then ground your own stance in the 4 key rewards and 2 important warning signs.

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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.

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