Consolidated Edison, Inc. ED
Verdict: Sell. Fair value $98.96 against a price of $98.50 on 6 Jan 2026.
In plain words
The case for: Wide competitive moat provides durability. Market leadership enables pricing power. Industry tailwinds with growing market.
The case against: Net Income shows extreme volatility, jumping 52% in 2023 to $2.52B and then falling 28% in 2024 to.... The OCF / Net Income ratio is highly erratic, swinging from a strong 2.37 in 2022 to a weak 0.86 in....
Main risks
- Persistent Negative Free Cash Flow: FCF has been negative for four consecutive years and in the TTM period, indicating that capital expenditures are consistently overwhelming cash from operations, requiring external financing.
- Extremely High Leverage: A Net Debt/EBITDA ratio of approximately 6.0x is very high, even for a capital-intensive utility, and points to significant financial risk. Ratios above 4.0x are typically a red flag.
- Poor Returns on Capital: The current ROIC of ~3.7% is exceptionally low and likely well below the company's cost of capital, suggesting that its large asset base is not generating sufficient returns. The ROE of 8.3% is also subpar for the sector.
- Net Income shows extreme volatility, jumping 52% in 2023 to $2.52B and then falling 28% in 2024 to...
- The OCF / Net Income ratio is highly erratic, swinging from a strong 2.37 in 2022 to a weak 0.86 in...
- Net Income shows extreme volatility, jumping 52% in 2023 to $2.52B and then falling 28% in 2024 to $1.82B. This is highly uncharacteristic for a regulated utility and strongly suggests a large, non-recurring gain significantly inflated 2023 earnings, making GAAP figures misleading for assessing core profitability.