Consolidated Edison
ED
$108.88
-0.68%
Consolidated Edison, Inc. is a regulated utility holding company that provides essential electricity, natural gas, and steam services to customers in southeastern New York, including New York City, and parts of New Jersey through its subsidiaries, Consolidated Edison of New York (CECONY) and Orange & Rockland (O&R). The company is a classic defensive, regulated utility with a stable, geographically concentrated customer base, deriving nearly all its earnings from these rate-regulated operations following the sale of its clean energy business in early 2023. The current investor narrative centers on its role as a reliable income stock in a volatile market, with attention focused on its ability to navigate regulatory rate cases, fund a significant capital expenditure program for grid modernization and reliability, and maintain its attractive dividend yield amidst rising interest rates.…
ED
Consolidated Edison
$108.88
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Investment Opinion: Should I buy ED Today?
Rating & Thesis: Hold. ED is a stable, income-generating utility stock suitable for defensive portfolios, but its lack of growth catalysts and weak relative momentum limit near-term upside potential. This aligns with the neutral-to-bearish consensus sentiment among the few covering analysts.
Supporting Evidence: The stock trades at a forward P/E of 16.80x, a discount to the utility sector average, and offers a dividend yield of 3.28% supported by a 57.6% payout ratio. Fundamentally, it demonstrates stability with an 8.89% YoY revenue growth in Q4 2025, a trailing net margin of 11.96%, and robust free cash flow generation of $3.5 billion TTM. However, its high PEG ratio of 2.31 signals expensive growth, and its significant underperformance versus the S&P 500 over the past year (-32.59% relative strength) confirms weak market favor.
Risks & Conditions: The two biggest risks are prolonged sector underperformance in a growth-oriented market and adverse regulatory decisions impacting future earnings power. This Hold rating would upgrade to a Buy if the forward P/E compressed below 15x, offering a more compelling entry yield, or if the stock demonstrated sustained relative strength by closing above its 52-week high of $116.23. It would downgrade to a Sell if the dividend payout ratio rose unsustainably above 80% or if revenue growth turned negative. The stock is currently fairly valued relative to its own history and slightly undervalued relative to sector peers, but this is offset by its poor growth profile.
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ED 12-Month Price Forecast
ED is a quintessential 'steady-state' utility with limited catalysts for significant outperformance or underperformance. Its value proposition is its defensive income stream, not capital appreciation. The neutral stance reflects this balanced, low-expectation outlook. The stance would upgrade to bullish if the stock breaks above $116.23 on strong volume, signaling a technical and fundamental breakout from its range. It would downgrade to bearish if it breaches key support at $108 and approaches its 52-week low of $94.96, indicating a failure of its defensive characteristics.
Wall Street consensus
Most Wall Street analysts maintain a constructive view on Consolidated Edison's 12-month outlook, with a consensus price target around $141.54 and implied upside of +30.0% versus the current price.
Average Target
$141.54
5 analysts
Implied Upside
+30.0%
vs. current price
Analyst Count
5
covering this stock
Price Range
$87 - $142
Analyst target range
Analyst coverage for ED is limited, with only 5 analysts providing estimates, which is low for a large-cap utility and may indicate it is less of a focus for growth-oriented research desks. The consensus sentiment leans neutral to bearish, as evidenced by recent institutional ratings which include multiple 'Underweight', 'Neutral', and 'Sector Perform' calls, with no recent 'Buy' or 'Overweight' ratings noted in the provided data. The average target price is not explicitly provided in the data, so implied upside cannot be calculated; the available data shows analysts estimate an average EPS of $7.72 for the coming period. The range of analyst estimates shows moderate uncertainty, with a low EPS estimate of $7.33 and a high of $8.07, a spread of approximately 10%. The high target likely assumes successful rate case outcomes and efficient capital deployment, while the low target may factor in regulatory headwinds or higher financing costs. The pattern of recent ratings shows stability, with firms largely reaffirming their neutral or underweight stances throughout early 2026, indicating a lack of near-term catalysts to change the fundamental outlook.
Bulls vs Bears: ED Investment Factors
The evidence tilts slightly bearish in the near term, primarily due to weak relative momentum and a lack of positive analyst catalysts. The bull case rests on ED's defensive characteristics, attractive yield, and valuation discount, which are compelling for income-oriented, risk-averse investors. The bear case highlights its growth limitations and persistent underperformance. The single most important tension in the investment debate is whether the stock's defensive yield and valuation discount can overcome its significant growth headwinds and negative market sentiment. The resolution of this tension depends on whether the market continues to favor growth over value and income.
Bullish
- Strong Free Cash Flow Generation: The company generated $3.5 billion in trailing twelve-month free cash flow, providing a robust foundation for funding its capital expenditure program and supporting its dividend. This substantial cash generation underpins the company's financial stability and ability to return capital to shareholders.
- Defensive Profile with Low Beta: ED's beta of 0.335 indicates it is approximately 67% less volatile than the S&P 500, making it a classic defensive holding. This low volatility is a key attraction for risk-averse investors seeking stability, especially during market downturns, as evidenced by its 9.02% gain over the last six months while the market was more volatile.
- Valuation Discount to Sector: ED trades at a trailing P/E of 17.55x, which is below the typical utility sector average often in the low 20s. This relative discount suggests the stock may offer value compared to peers, especially given its stable, regulated earnings profile and 11.96% net margin.
- Solid Dividend Payout: With a dividend yield of 3.28% and a sustainable payout ratio of 57.6%, ED offers a reliable income stream. The payout is well-covered by earnings and strong free cash flow, making it a core holding for income-focused portfolios.
Bearish
- Analyst Sentiment Neutral to Bearish: Analyst coverage is limited to 5 firms, with recent ratings showing multiple 'Underweight', 'Neutral', and 'Sector Perform' calls and no recent 'Buy' ratings. This lack of bullish conviction suggests a dearth of near-term catalysts and a consensus view of limited upside potential.
- Weak Relative Strength vs. Market: ED has significantly underperformed the broader market, with a -32.59% relative strength over the past year and -9.58% over the past month. This persistent underperformance, even during a strong market rally, indicates a lack of investor enthusiasm for the utility sector or ED specifically.
- Modest Growth and High PEG Ratio: The company's PEG ratio of 2.31 is high, indicating the market is paying a premium for its modest expected earnings growth. With revenue growth of 8.89% YoY in Q4 2025, the underlying growth trajectory is stable but unexciting, limiting multiple expansion potential.
- Geographic Concentration Risk: Nearly all earnings are derived from rate-regulated operations in southeastern New York and parts of New Jersey. This geographic concentration exposes the company to regulatory and economic risks specific to a single region, limiting diversification benefits.
ED Technical Analysis
The stock is in a sustained uptrend over the observed six-month period, with the price advancing from approximately $100 in late October 2025 to a recent close of $109.06, representing a 9.02% gain over the last six months. Currently trading at $109.06, the stock sits at 83.9% of its 52-week range ($94.96 to $116.23), indicating it is in the upper portion of its annual band but not at an extreme high, suggesting room for continued momentum if fundamentals support it. Recent momentum shows a divergence from the longer-term uptrend; the stock gained 5.00% over the last three months but has declined 0.88% over the past month, signaling a potential consolidation or pullback after the prior advance. This short-term weakness is further evidenced by a -1.08% price change on the last trading day, with the stock closing below its previous close of $110.25. Key technical support is anchored at the 52-week low of $94.96, while immediate overhead resistance is at the 52-week high of $116.23; a decisive breakout above $116.23 would signal a resumption of the primary uptrend, while a breakdown below the recent April lows near $108 could indicate a deeper correction. The stock exhibits low volatility relative to the broader market, with a beta of 0.335, meaning it is approximately 67% less volatile than the S&P 500, which is characteristic of a defensive utility stock and important for risk-averse portfolios seeking stability.
Beta
0.34
0.34x market volatility
Max Drawdown
-15.8%
Largest decline past year
52-Week Range
$95-$116
Price range past year
Annual Return
-2.9%
Cumulative gain past year
| Period | ED Return | S&P 500 |
|---|---|---|
| 1m | -4.0% | +12.6% |
| 3m | +2.8% | +2.5% |
| 6m | +11.8% | +4.3% |
| 1y | -2.9% | +28.4% |
| ytd | +8.9% | +4.3% |
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ED Fundamental Analysis
Revenue growth is modest but positive, with the most recent quarterly revenue (Q4 2025) of $3.995 billion representing an 8.89% year-over-year increase from $3.669 billion in Q4 2024. The multi-quarter trend shows revenue volatility typical of utilities due to seasonality and commodity pass-throughs, with Q3 2025 revenue at $4.53 billion and Q1 2025 at $4.798 billion, but the underlying growth trajectory is stable. Segment data indicates the Electricity business ($5.785 billion) is the primary revenue driver, followed by purchased Oil and Gas ($2.466 billion) and Steam ($541 million). The company is consistently profitable, with Q4 2025 net income of $297 million and a trailing twelve-month net margin of 11.96%. Profitability margins show some quarterly fluctuation; the gross margin for Q4 2025 was 51.51%, down from 79.14% in the prior quarter (which had an unusually low cost of revenue), but the operating margin was a healthy 12.09%. The trend indicates stable core utility profitability, though margins are subject to regulatory treatment and fuel cost recovery mechanisms. The balance sheet is moderately leveraged with a debt-to-equity ratio of 1.19, which is manageable for a capital-intensive utility. Financial health is supported by strong cash generation, with free cash flow over the trailing twelve months of $3.496 billion and a current ratio of 1.02, indicating adequate short-term liquidity. The return on equity of 8.36% is reasonable for a regulated utility, reflecting steady but not spectacular returns on capital, funded by a mix of operating cash flow and debt.
Quarterly Revenue
$4.0B
2025-12
Revenue YoY Growth
+0.08%
YoY Comparison
Gross Margin
+0.51%
Latest Quarter
Free Cash Flow
$3.5B
Last 12 Months
Revenue & Net Income Trends (2 Years)
Revenue Breakdown
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Valuation Analysis: Is ED Overvalued?
Given a positive net income, the primary valuation metric is the Price-to-Earnings (PE) ratio. The stock trades at a trailing PE of 17.55x and a forward PE of 16.80x based on analyst estimates. The slight discount of the forward multiple suggests the market anticipates modest earnings growth, which is consistent with the regulated, low-growth utility profile. Compared to sector averages, ED's valuation presents a mixed picture; its trailing PE of 17.55x is below the typical utility sector average (often in the low 20s), suggesting a relative discount. However, its Price-to-Sales ratio of 2.10x and EV/EBITDA of 10.18x need to be evaluated in the context of its stable cash flows and regulatory framework. The discount may be attributed to its slower growth profile and geographic concentration relative to peers with more aggressive expansion plans. Historically, the stock's current trailing PE of 17.55x sits below its own multi-year range observed in the historical ratios data, which has seen peaks above 40x and troughs near 5x, largely driven by earnings volatility from one-time events. Trading near the midpoint of its historical band suggests the market is pricing in a balanced view of its steady earnings and dividend, without excessive optimism or pessimism, aligning with its status as a core holding for income.
PE
17.5x
Latest Quarter
vs. Historical
Low-End
5-Year PE Range 6x~45x
vs. Industry Avg
N/A
Industry PE ~N/A*
EV/EBITDA
10.2x
Enterprise Value Multiple
Investment Risk Disclosure
Financial & Operational Risks: ED faces moderate financial risk from its capital-intensive business model, reflected in a debt-to-equity ratio of 1.19. While manageable, this leverage requires consistent regulatory approval for rate increases to ensure returns on invested capital. Earnings volatility is another concern, with quarterly net income fluctuating from $202 million to $791 million over the past year, driven by seasonality and fuel cost pass-throughs. The company's heavy reliance on regulatory frameworks in New York and New Jersey creates concentration risk, as adverse regulatory decisions could directly pressure allowed returns and profitability.
Market & Competitive Risks: The primary market risk is valuation compression, especially if interest rates remain elevated, increasing the attractiveness of fixed-income alternatives relative to dividend stocks like ED. The stock's high PEG ratio of 2.31 suggests it is vulnerable to de-rating if earnings growth fails to accelerate. Competitive risks are muted due to its regulated monopoly status, but the sector faces long-term disruption from distributed energy resources and decarbonization mandates, which could necessitate significant, potentially unrecovered, capital spending. The stock's beta of 0.335 indicates low market correlation, but this defensive characteristic can become a liability in strong bull markets, leading to chronic underperformance as seen in its -32.59% one-year relative strength.
Worst-Case Scenario: The worst-case scenario involves a combination of an unfavorable major rate case outcome in its core New York service territory, coupled with a sharp rise in interest rates that triggers a sector-wide de-rating. This could compress the P/E multiple towards its historical lows while stalling earnings growth. A realistic downside could see the stock re-testing its 52-week low of $94.96, representing a potential loss of approximately -13% from the current price of $109.06. A more severe bear case, incorporating a broader market sell-off, could push the stock towards the lower end of its historical valuation range, implying a drawdown potentially exceeding the observed -15.79% maximum drawdown.
FAQ
The key risks are, in order of severity: 1) Regulatory Risk: Adverse decisions from New York or New Jersey regulators could reduce allowed returns on equity, directly impacting profits. 2) Interest Rate Risk: As a yield-oriented stock, ED is sensitive to rising rates, which make bonds more competitive and can compress its P/E multiple. 3) Execution Risk: The company must efficiently manage a large capital expenditure program for grid modernization; cost overruns could pressure earnings. 4) Market Risk: The stock's chronic underperformance in bull markets (beta of 0.335) poses an opportunity cost risk for investors missing out on broader market gains.
The 12-month forecast presents three scenarios. The Base Case (65% probability) sees the stock trading between $105 and $115, as it delivers steady earnings in line with the $7.72 EPS consensus but lacks catalysts for a breakout. The Bull Case (20% probability) targets $116 to $122, driven by favorable regulatory outcomes and a market rotation into value. The Bear Case (15% probability) envisions a drop to $95-$105 due to rising rates or an earnings miss. The Base Case is most likely, anchored by the assumption that ED will continue to execute its regulated utility model without major surprises, resulting in range-bound trading centered on its dividend yield.
ED appears fairly valued to slightly undervalued based on traditional metrics. Its forward P/E of 16.80x is below the typical utility sector average, suggesting a relative discount. However, its high PEG ratio of 2.31 indicates the market is paying a premium for its modest growth, which offsets the P/E discount. Compared to its own historical P/E range, trading at 17.55x places it near the midpoint, implying the market is pricing in its steady, low-growth profile accurately. The valuation implies the market expects mid-single-digit earnings growth and a stable dividend, with little room for multiple expansion.
ED is a good buy for a specific type of investor: one seeking stable income and low portfolio volatility. With a 3.28% dividend yield, a manageable payout ratio of 57.6%, and a beta of 0.335, it serves a defensive role. However, for investors seeking growth or short-term trading gains, it is not a good buy, as evidenced by its -32.59% underperformance versus the S&P 500 over the past year. The current Hold rating suggests waiting for a better entry point, such as a pullback towards $105, to improve the yield-on-cost.
ED is unequivocally suitable for long-term investment, not short-term trading. Its low volatility (beta 0.335) and income focus provide little momentum for short-term gains, as shown by its recent -0.88% one-month return. The stock is designed for investors with a multi-year horizon who can collect and reinvest the reliable 3.28% dividend while benefiting from the stability of regulated cash flows. A minimum holding period of 3-5 years is suggested to ride out interest rate cycles and realize the compounding benefits of dividend reinvestment, making it a core holding for retirement or income portfolios.
