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Quote this valuation with its source: Fair value, Potential value and the price at analysis.
FAQ
ED — frequently asked questions
Is Consolidated Edison Inc. overvalued?
In our latest published analysis dated 2026-10-03, ED trades close to fair value. The price recorded at analysis is 103 USD versus our fair value of 106 USD; the high endpoint is presented separately as potential value of 117 USD. That implies roughly 2.7% upside to fair value at that date.
Our latest published report, analyzed 2026-10-03, gives ED a fair value of 106 USD and a potential value of 117 USD. The conclusion is triangulated across multiple valuation models and weighted by reliability for Consolidated Edison Inc.'s archetype; it is a dated research output, not a live price.
Should I buy ED now?
Our latest published rating for ED, analyzed 2026-10-03, is Hold. Consolidated Edison Inc. trades close to fair value at the analysis-date price of 103 USD versus fair value of 106 USD; potential value is 117 USD. This is research for educational purposes, not personalized investment advice.
What are the biggest risks for ED?
The dedicated bear-case section in our report analyzed 2026-10-03 documents Consolidated Edison Inc.'s material risks, evidence, thresholds, and thesis-invalidation conditions. Scenario-specific explanations remain in that section so the report does not repeat or decontextualize them elsewhere.
What is ED's rating?
Our latest published rating for ED, analyzed 2026-10-03, is Hold, with a published moat assessment of 7/10 (Narrow). It reflects our fair value of 106 USD, the potential value of 117 USD, and the price recorded at analysis (103 USD).
Este informe aún no se ha traducido. Actualice en unos minutos una vez que la cola de traducción se ponga al día.
§1 Resumen ejecutivoEN
Respuesta en 30 segundosHold
Precio frente a valor
Precio
$103.39
Valor razonable
$106.16
Valor potencial
$116.97
A fecha de
2026-10-02
Por qué puede funcionar
The greatest investment opportunity centers on timely regulatory rate base inclusion of Con Edison's clean energy transmission interconnections and urban grid modernizations, following capital expenditures of USD 4,764 million in FY2025.
Qué cambiaría nuestra opinión
Benchmark 10-year Treasury yields remain elevated above 5.24% while the New York State Public Service Commission lowers authorized ROE below 9.00% or disallows urban infrastructure cost overruns in upcoming rate case filings.
We rate Consolidated Edison as Hold. At the report analysis price of USD 103.39 on October 2, 2026, the equity trades near our Fair value midpoint of USD 106.16, offering defensive dividend income alongside limited near-term price appreciation.3
A Hold rating signifies that existing shareholders should maintain their equity holdings to collect dependable quarterly dividends, but incremental capital is better directed toward assets with wider valuation margins. Consolidated Edison provides non-discretionary utility delivery services protected by revenue decoupling, but its prevailing market valuation already reflects its visible mid-single-digit regulatory earnings growth trajectory.
The stock was evaluated at a price of USD 103.39 as of October 2, 2026. That valuation sits 2.61% below our Fair value midpoint of USD 106.16 and 11.61% below our estimate of USD 116.97. This modest price discount reflects a balanced profile where steady dividend payments provide ongoing total return while share price appreciation remains bounded by regulated rate base returns and utility sector .
The primary investment risk that could impair the thesis is the combination of persistent high borrowing costs and regulatory rate disallowances. Con Edison carries USD 28,320 million in total debt with pre-tax borrowing costs at 6.41% and over USD 2.5 billion in principal debt scheduled for refinancing over five years. If customer bill inflation leads the New York State Public Service Commission to reduce authorized return on equity below 9.0% or disallow underground capital cost overruns, operating margin would compress below the FY2025 level of 17.22%, directly suppressing earnings compounding and dividend growth.2,3,4,5
Conversely, the core catalyst supporting equity valuation is the ongoing capital expenditure program, which deployed USD 4,764 million in FY2025 across transmission, distribution, and clean energy interconnection. Under established regulatory frameworks, approved capital investments compound directly into the rate base, expanding delivery revenue from USD 17,049 million in FY2025 toward consensus forecasts of USD 18,433 million in FY2027. Continued constructive regulatory rate settlements would allow diluted earnings per share to grow from USD 5.64 in FY2025 toward USD 6.50 in FY2027, unlocking a pathway toward our Potential value of USD 116.97 per share.1,3,5
Exclusive Downstate New York Delivery Monopoly
Statutory concessions granted by the New York State Public Service Commission legally insulate Con Edison's dense urban network from commercial peer duplication, ensuring stable long-term cash generation.5
Rate Base Driven Earnings Growth
Capital expenditure of USD 4,764 million in FY2025 drives steady 5% to 7% rate base expansion, supporting consensus diluted EPS growth from USD 5.64 in FY2025 to USD 6.50 in FY2027.1,3
Annual operating cash flow of USD 4,800 million covers common dividend payments of USD 1,166 million by 4.1 times, anchoring reliable utility dividend income across economic cycles.5
Recomendación de la casa
Consolidated Edison is rated Hold because its trading price of USD 103.39 sits near our Fair value midpoint of USD 106.16, balancing defensive monopoly cash flows against elevated debt refinancing requirements and capital intensity.3
Descripción general de la empresa
Consolidated Edison Inc. is a major investor-owned energy delivery utility holding company whose primary operating subsidiary, Consolidated Edison Company of New York (CECONY), provides regulated electric, natural gas, and steam delivery services across a 660-square-mile service area encompassing all of New York City (with the exception of a portion of Queens) and most of Westchester County, serving more than nine million residents and approximately 3.7 million electric customer accounts.
The utility operates as an exclusive natural delivery monopoly overseen by the New York State Public Service Commission, which requires any prospective competitor to obtain state regulatory approval, build duplicate physical conduits, and meet state performance standards. In addition to its core downstate New York regulated delivery franchise, the company operates Con Edison Transmission, which develops and invests in regional electric and natural gas transmission infrastructure projects.
§2 Caso bajistaEN
A rigorous stress test evaluates the simultaneous convergence of macroeconomic borrowing pressure and regulatory disallowances. Con Edison carries $28,320 million in total debt with over $2.5 billion in principal scheduled for refinancing over the next five years. With benchmark 10-year Treasury yields at 5.24% and pre-tax cost of debt at 6.41%, a +150 to +200 bps increase in corporate borrowing spreads would expand annual interest expense well above the FY2025 baseline of $1,233 million. Simultaneously, maintaining annual capital expenditures near $4,764 million (28.16% of revenue, 2.05x depreciation) in a complex urban environment leaves free cash flow deeply constrained ($36 million in FY2025). If customer bill sensitivity leads the New York Public Service Commission to reduce authorized ROE below 9.0% and disallow $300M+ of urban capital additions, operating income would fall from $2,935 million to below $2,500 million, lowering operating margin from 17.22% toward 14.22%. Under this compounding stress, annual diluted EPS growth would decelerate to 2.80%, requiring external financing to sustain dividend distributions and pulling equity valuation toward the downside estimate of $85.26.
Regulatory commission imposes lower authorized return on equity and disallows maintenance cost overruns
Cómo puede fallar esta tesis
Severe utility debt refinancing shock and long-term interest rate spike
Con Edison carries $28,320 million in total debt with pre-tax cost of debt already at 6.41% against a 5.24% risk-free rate. A +200 bps spike in benchmark yields would elevate interest expense on over $2.5B of scheduled refinancings, expanding WACC from 5.87% to ~7.87% and driving equity value sharply lower.2,3
FV impact
-24%
Cost of capital 2 points higher
Señales de alerta temprana a vigilar
Los cinco acontecimientos que debilitarían nuestra tesis de inversión.
Actual:2.05x in FY2025 ($4,764 million capex vs $2,321 million D&A)
§3 Foso competitivoEN
Narrow
Consolidated Edison possesses a narrow economic moat rooted in the statutory monopoly concessions governing its transmission and distribution networks across New York City and Westchester County. Under the regulatory supervision of the New York State Public Service Commission (NYPSC), the utility operates as the exclusive provider of electric and gas delivery services to over three million customers. The dense subterranean infrastructure required to distribute electricity, high-pressure steam, and gas throughout Manhattan and adjacent boroughs cannot be commercially or physically replicated by rival utilities such as American Electric Power, Duke Energy, Entergy, or Xcel Energy. This efficient scale advantage creates a natural monopoly where duplicate capital outlays would be economically irrational and legally prohibited.
The economic moat is reinforced by regulatory intangible assets that decouple delivery revenue from volumetric customer consumption and insulate operating results from commodity price swings. In FY2025, Con Edison generated $17,049 million in revenue and $2,935 million in operating income, translating into a 17.22% operating margin. While this operating margin sits below regional holding peers (AEP at 23.25%, DUK at 27.50%, ETR at 24.46%) due to urban operating complexities, Con Edison's allowed return on equity of ~8.96%-9.50% provides steady economic returns above its moderate cost of equity of 6.31%.
Capital deployment into rate base modernization strengthens network resilience while extending the utility's regulatory compact. Capital expenditures totaled $4,494 million in FY2023, $4,771 million in FY2024, and $4,764 million in FY2025, consistently surpassing historical depreciation (2.05x in FY2025). Although accounting ROIC stands at 4.61% during this heavy build phase, the structural insulation of regulated rate base compounding protects cash generation and supports dividend durability across economic cycles.
Beneficio económico
While Con Edison's accounting ROIC of 4.61% appears modest due to heavy work-in-progress capital expenditures, its allowed regulatory return on equity of ~8.96%-9.50% comfortably exceeds its low computed cost of equity of 6.31% and WACC of 5.87%. Regulated rate-base asset compounding ensures positive economic value creation across multi-year rate settlement periods.2
7/ 10
Narrow
Sources of advantage
01Exclusive statutory franchise territory and regulatory concessions — Con Edison operates under exclusive statutory franchise agreements granted by the New York State Public Service Commission for electricity, natural gas, and steam transmission and distribution across New York City and Westchester County, legally preventing peer market entry and establishing revenue decoupling mechanisms.Wide
02Efficient scale and prohibitive physical infrastructure duplication costs — The high density of downstate New York's underground grid ($4,764 million FY2025 capex, 2.05x depreciation) makes parallel transmission conduits economically irrational and physically impossible for regional peers (AEP, DUK, ETR, XEL).Wide
Amenazas conocidas al foso
Amenaza
Severidad
Cronograma
Mitigación
Adverse regulatory rate case settlements cutting authorized ROE below 9.0%
high
1-3 years
Active regulatory stakeholder engagement, alignment of capital projects with statutory New York Climate Leadership and Community Protection Act goals, and multi-year rate settlement structures.
Distributed energy resources, behind-the-meter solar, and localized battery storage adoption
The highlighted cell is Fair value when every assumption sits at its base level ($106.16). Each row and column shows what Fair value becomes when one assumption moves.
Free cash flow to the firm stays positive in the first projected year at $125.5M after modeled reinvestment of $2.4B, with terminal value at 90.1% of enterprise value. A sudden drop in free cash flow is not projected unless capital spending relative to revenue, reinvestment, or gross margin resets materially.
Execution of planned capital investment program under existing regulatory settlements
Authorized return on equity maintained near current utility averages
Revenue decoupling continues to neutralize volume and weather fluctuations
Dividend payments grow in line with regulated earnings compounding
In the base scenario, assigned a probability of 55.0% with an implied return of 2.7% toward a target of $106.16, Consolidated Edison compounds earnings steadily in line with approved multi-year rate plans. Delivery revenues remain insulated from volumetric fluctuations through established revenue decoupling mechanisms. Elevated capital expenditures expand the regulated rate base, supporting mid-single-digit earnings per share and dividend growth, though substantial debt refinancing needs and negative free cash flow balance near-term returns relative to $103.39.
Accelerated regulatory approvals for clean energy and grid modernization investments
Authorized return on equity finalized above historical rate plan baselines
Capital expenditure intensity moderates earlier as primary transmission projects complete
§7 Árbol de decisión de resultadosEN
Superado
Upgrade the rating; Consider expanding allocation on verified rate base expansion, validating whether capital deployment pace is receiving timely regulatory recovery.
Disparador: Operating revenue and diluted earnings per share exceeding consensus expectations driven by higher weather-normalized delivery volumes and timely rate base capital execution
An earnings beat driven by accelerated rate base capital additions and constructive regulatory rate treatment validates faster earnings compounding toward $116.97. Expanding operating margins would indicate superior operating efficiency in managing urban transmission expenses, supporting an improved risk-adjusted return profile above $103.39.
En línea
Maintain Hold; Maintain existing portfolio weighting, collecting quarterly dividends while monitoring debt refinancing costs and rate case calendar milestones.
Performance tracking consensus expectations confirms steady rate base compounding under approved New York Public Service Commission multi-year settlements. While operating cash flow remains resilient, heavy capital expenditures and debt financing needs keep valuation anchored near $106.16, offering modest upside from $103.39.
Fallo
Downgrade the rating; Trim position exposure to reduce portfolio vulnerability to prolonged regulatory lag and debt refinancing pressures.
Disparador: Operating revenue and diluted earnings per share falling below consensus expectations due to storm restoration expense spikes, rate case disallowances, or elevated interest expense on debt refinancings
An earnings miss caused by regulatory disallowances or surging borrowing costs would directly threaten dividend growth durability and erode net margins. With free cash flow constrained by ongoing infrastructure commitments, sustained earnings shortfall would compress valuation below $106.16 toward downside ranges.
Calidad de los beneficios
Earnings quality is supported by regulated utility revenue decoupling and fuel cost pass-through mechanisms that eliminate commodity price volatility. Operating cash flow reliably exceeds net income, confirming high accounting cash conversion. However, high capital expenditures to modernize infrastructure consume virtually all operating cash flow, resulting in negligible free cash flow and requiring ongoing debt issuance to fund dividend payments and rate base expansion.
Métricas a vigilar antes de la publicación
01
Métrica:
Capital deployment and rate base additions pace
ActualCapital spending remains elevated above historical depreciation to fund clean energy transition infrastructure and urban grid reliability under multi-year rate plans.
Por qué importa
Capital reinvestment expands the utility rate base upon which authorized returns are earned. Excessive spending beyond regulatory caps risks disallowances, whereas steady execution expands future earnings power.
02
Métrica:
New York Public Service Commission rate case determinations
ActualOperating under multi-year rate plans with revenue decoupling mechanisms that insulate delivery revenues from weather and customer volume variances.
FY2025 operating cash flow reached $4,800 million, up substantially from $3,614 million in FY2024, demonstrating core operational cash generation. However, capital expenditures of $4,764 million consumed 99.25% of operating cash flow, leaving modest free cash flow of $36 million. Consequently, common dividend distributions of $1,166 million required external debt financing. While operating cash flow covers dividends by 4.12x, free cash flow conversion will remain suppressed until capex moderates post-2027 toward 1.5x depreciation.3,4,5
Asignación de capital
Management's capital allocation is disciplined around regulated rate base investments, deploying $4,494 million in FY2023, $4,771 million in FY2024, and $4,764 million in FY2025. Shareholder returns are anchored by a 57.15% dividend payout ratio on GAAP of $2,023 million, maintaining a 50-year record of annual dividend increases. Capital structure management relies heavily on ($28,320 million total debt), keeping debt-to-capital around 50% in compliance with regulatory capital structure requirements.
Because Con Edison operates under regulated cost-of-service ratemaking, returns are bounded by approved rate base and authorized ROE rather than competitive market forces. As multi-billion-dollar transmission and distribution projects transition from construction into rate base, cash returns stabilize in line with allowed capital structures.
Con Edison's reported accounting ROIC of 4.61% compares with a computed WACC of 5.87%, reflecting the capital drag of ongoing work-in-progress infrastructure not yet earning cash revenues. However, on equity capital, its earned ROE of ~8.96% to 9.50% exceeds its computed cost of equity of 6.31%, generating sustainable economic profits under regulatory rate orders.
FY2025 capex of $4,764 million represented 2.05x depreciation, leaving at $36 million despite of $4,800 million.
Ingresos más recientes17 mil M US$CAGR de ingresos +3,9 %
Margen operativo17,2 %10 periodos fiscales
Flujo de caja libre más reciente36 M US$FY2025
Deuda neta24,2 mil M US$FY2025
Desglose de la cuenta de resultadosCómo la escala del negocio se convierte en beneficio declarado.
StockMarketAgent.AI
Ingresos17 mil M US$Coste de ventas−6557 M US$Beneficio bruto10,5 mil M US$Gastos operativos−7557 M US$Beneficio operativo2935 M US$Partidas no operativas e impuestos−912 M US$Beneficio neto2023 M US$
Datos del historial financiero
Ingresos
17.049.000.000 US$
Coste de ventas
6.557.000.000 US$
Beneficio bruto
10.492.000.000 US$
Gastos operativos
7.557.000.000 US$
Beneficio operativo
2.935.000.000 US$
Partidas no operativas e impuestos
-912.000.000 US$
Beneficio neto
2.023.000.000 US$
Resumen del balanceCómo se mantienen y financian los activos declarados en el período seleccionado.
StockMarketAgent.AI
Composición de activosFinanciado por
Activos totales74,6 mil M US$Efectivo1629 M US$Activos corrientes6750 M US$Pasivos totales50,4 mil M US$Pasivos corrientes6614 M US$Patrimonio neto24,2 mil M US$
Datos del desglose del balance
Activos totales
74.603.000.000 US$
Efectivo
1.629.000.000 US$
Activos corrientes
6.750.000.000 US$
Pasivos totales
50.413.000.000 US$
Pasivos corrientes
6.614.000.000 US$
Patrimonio neto
24.190.000.000 US$
Puente de flujo de cajaCómo el flujo de caja operativo se convirtió en flujo de caja libre en FY2025.
StockMarketAgent.AI
Conciliación del flujo operativo
Beneficio neto2023 M US$Depreciación y amortización+2321 M US$Otros ajustes operativos+456 M US$Flujo de caja operativo4800 M US$
Conciliación del efectivo inicial al final
Efectivo inicial1333 M US$Flujo de caja operativo+4800 M US$Flujo de inversión−5249 M US$Flujo de financiación+746 M US$Efectivo final1630 M US$
4800 M US$ − 4764 M US$Flujo de caja libre 36 M US$
Datos del puente de flujo de caja
Beneficio neto
2.023.000.000 US$
Entrada operativa
4.800.000.000 US$
Depreciación y amortización
2.321.000.000 US$
Otros ajustes operativos
456.000.000 US$
Flujo de caja operativo
4.800.000.000 US$
Efectivo disponible
6.879.000.000 US$
Efectivo inicial
1.333.000.000 US$
Entrada de financiación
746.000.000 US$
Salida de inversión
5.249.000.000 US$
Capex
4.764.000.000 US$
Otras actividades de inversión
485.000.000 US$
Efectivo final
1.630.000.000 US$
Flujo de inversión
-5.249.000.000 US$
Flujo de financiación
746.000.000 US$
Ingresos y beneficiosCómo la escala del negocio se convierte en beneficio declarado.
Efectivo y deudaLiquidez disponible frente al endeudamiento total.
Generación de efectivoFlujo de caja operativo frente al flujo de caja libre.
RentabilidadEvolución de los márgenes bruto, operativo y neto.
Datos financieros puntuales utilizados en el análisis del 2026-10-03.
Datos del historial financiero
Período
Ingresos
EBITDA
Beneficio neto
Flujo de caja operativo
Flujo de caja libre
Capex
Depreciación y amortización
Compensación basada en acciones
Recompras de acciones
Dividendos pagados
Emisión neta de deuda
Flujo de inversión
Flujo de financiación
Efectivo inicial
Efectivo final
Efectivo e inversiones
Deuda total
Margen operativo
ROIC
WACC
Diferencial ROIC−WACC
2016-12-31
12,1 mil M US$
3855 M US$
1245 M US$
3459 M US$
-1776 M US$
5235 M US$
1216 M US$
50 M US$
—
763 M US$
—
-4950 M US$
1345 M US$
—
830 M US$
1049 M US$
14,8 mil M US$
23,0 %
—
3,0 %
—
2017-12-31
12 mil M US$
4067 M US$
1525 M US$
3367 M US$
-239 M US$
3606 M US$
1341 M US$
63 M US$
—
803 M US$
—
-3710 M US$
357 M US$
830 M US$
844 M US$
1127 M US$
16 mil M US$
23,1 %
—
3,3 %
—
2018-12-31
11,9 mil M US$
4040 M US$
1382 M US$
2695 M US$
-2554 M US$
5249 M US$
1438 M US$
14 M US$
—
842 M US$
—
-5471 M US$
2938 M US$
844 M US$
1006 M US$
895 M US$
18,1 mil M US$
22,3 %
—
3,4 %
—
2019-12-31
12,1 mil M US$
4375 M US$
1343 M US$
3134 M US$
-542 M US$
3676 M US$
1684 M US$
70 M US$
—
924 M US$
—
-3782 M US$
859 M US$
1006 M US$
1217 M US$
981 M US$
20 mil M US$
22,0 %
—
2,7 %
—
2020-12-31
12 mil M US$
4108 M US$
1101 M US$
2198 M US$
-1887 M US$
4085 M US$
1920 M US$
416 M US$
—
975 M US$
—
-4224 M US$
2245 M US$
1217 M US$
1436 M US$
2544 M US$
22,3 mil M US$
22,1 %
—
2,2 %
—
2021-12-31
13,5 mil M US$
4372 M US$
1346 M US$
2733 M US$
-1231 M US$
3964 M US$
2032 M US$
408 M US$
0 US$
1030 M US$
—
-3484 M US$
461 M US$
1436 M US$
1146 M US$
1984 M US$
23 mil M US$
21,0 %
—
2,7 %
—
2022-12-31
15,5 mil M US$
5165 M US$
1660 M US$
3935 M US$
-530 M US$
4465 M US$
2056 M US$
64 M US$
0 US$
1089 M US$
2096 M US$
-4565 M US$
1014 M US$
1146 M US$
1530 M US$
1826 M US$
23,4 mil M US$
17,0 %
—
4,9 %
—
2023-12-31
14,5 mil M US$
6062 M US$
2519 M US$
2156 M US$
-2338 M US$
4494 M US$
2031 M US$
53 M US$
1000 M US$
1096 M US$
588 M US$
-1003 M US$
-1488 M US$
1530 M US$
1195 M US$
1761 M US$
22,2 mil M US$
22,1 %
—
4,9 %
—
2024-12-31
15,5 mil M US$
5480 M US$
1820 M US$
3614 M US$
-1157 M US$
4771 M US$
2155 M US$
—
0 US$
1100 M US$
2880 M US$
-5273 M US$
1797 M US$
1195 M US$
1333 M US$
21,9 mil M US$
24,7 mil M US$
17,3 %
—
6,2 %
—
2025-12-31
17 mil M US$
6151 M US$
2023 M US$
4800 M US$
36 M US$
4764 M US$
2321 M US$
—
0 US$
1166 M US$
555 M US$
-5249 M US$
746 M US$
1333 M US$
1630 M US$
1629 M US$
25,8 mil M US$
17,2 %
—
5,0 %
—
§9 Comparación de valoración con pares
Valor razonableReport-date price
Consolidated Edison Inc.ED
Precio / valor razonable
Valor razonable106,16 US$Report-date price103,39 US$
Fecha de evaluación
Ventaja competitivaNarrow
Cuadro de mando de inversión63 / 100
Xcel Energy Inc.XEL
Precio / valor razonable
Valor razonable85,03 US$Report-date price79,73 US$
Fecha de evaluación
Ventaja competitivaNarrow
Cuadro de mando de inversión52 / 100
Entergy CorporationETR
Precio / valor razonable
Valor razonable77,58 US$Report-date price100,94 US$
Fecha de evaluación
Ventaja competitivaNarrow
Cuadro de mando de inversión48 / 100
Consolidated Edison Inc.ED
Precio / valor razonable
Valor razonable106,16 US$Report-date price103,39 US$
Consolidated Edison Inc. (ED) trades at 16.1x forward earnings against a peer median of 16.7x. Its EV/EBITDA of 10.6x compares with a peer median of 13.5x. The comparison uses 4 peers: Xcel Energy Inc., Entergy Corporation, American Electric Power Company Inc. and Duke Energy Corporation, as of 2026-10-03.
§10 Industria y cicloEN
Fase del ciclo
Expansion
Sector-wide benchmark data shows an industry capex-to-revenue ratio of 33.60% and an industry capex-to-depreciation ratio of 3.15x. Con Edison's capital expenditures of $4,764 million in FY2025 represent 28.16% of its $17,049 million revenue and 2.05x depreciation, confirming that the utility sector is undergoing a prolonged capital expansion phase driven by grid modernization and clean energy mandates.3,5
Ciclo alcista
In an expansionary bull cycle, state regulators grant timely rate base additions and authorized ROEs exceeding 9.6%, facilitating rapid capital recovery on transmission projects. Decoupled rate mechanisms protect top-line growth, while declining benchmark interest rates reduce refinancing costs, enabling mid-single-digit dividend growth and accelerating post-build free cash flow conversion.
Ciclo bajista
In a contractionary or stagflationary cycle, rising customer bill resistance prompts regulators to deny full capex recovery and compress allowed ROEs below 9.0%. Concurrently, high interest rates increase debt service on maturing bonds, while urban construction inflation expands free cash flow deficits, forcing dilutive capital raises.
Tendencias seculares
Tendencia
Impacto
Nota
Clean energy transition and grid electrification mandates
positive
State statutory decarbonization goals under the Climate Leadership and Community Protection Act mandate multi-billion-dollar investments in transmission, offshore wind interconnections, and electric vehicle charging infrastructure, expanding rate base.
Urban grid climate resilience and subterranean infrastructure replacement
neutral
Rising frequency of severe storm events requires ongoing storm hardening and subterranean flood mitigation across coastal New York substations, sustaining elevated capex requirements ($4,764M in FY2025).
Posicionamiento
Consolidated Edison is positioned as a pure-play regulated transmission and distribution utility serving the densely populated New York metropolitan area. Unlike merchant generators or unregulated power providers, its returns are insulated from commodity price volatility and demand volume swings through revenue decoupling. However, urban infrastructure density imposes higher operational costs, resulting in a 17.22% operating margin that sits below peer holding company averages (DUK 27.50%, ETR 24.46%, AEP 23.25%, XEL 22.70%).5
§11 Gestión de posiciónEN
Tamaño de posición
3-4%
Consolidated Edison carries a Hold committee rating with a modest 2.68% implied upside to Fair value ($106.16) based on the analysis price of $103.39. For diversified income portfolios, an existing position weight of 3-4% provides stable dividend yield and defensive insulation, but new capital deployment is not recommended until market pricing offers a wider margin of safety.3
Riesgo
Risk management focuses on interest rate sensitivity and regulatory execution. With $28,320 million in total debt and a pre-tax cost of debt of 6.41%, refinancing lower-coupon maturing debt in a 5.24% 10-year Treasury environment represents the primary financial headwind. Investors should verify that Con Edison maintains adequate liquidity ($1,629 million cash in FY2025) and utilizes regulatory tracker mechanisms to pass through borrowing cost adjustments in subsequent rate case filings.
Tramos de entrada
Nivel
Acción
Por qué
95.00
Initial Accumulation
A pullback to $95.00 represents an ~11% discount to Fair value ($106.16), lifting the dividend yield above 3.7% and establishing a sufficient buffer against debt refinancing drag.
Consolidated Edison offers dependable utility dividend income supported by USD 4,800 million of operating cash flow (4.1x dividend coverage) and a 57.15% payout ratio. However, with utility yields competing against 5.24% Treasury yields and modest upside from USD 103.39 to Fair value USD 106.16, existing positions should be held for cash return rather than increased.2,5
Total Return Investor
Hold
With only 2.68% upside to our Fair value midpoint of USD 106.16 and consensus diluted EPS growth of 8.29% in FY2026 and 6.42% in FY2027, total return potential is closely matched with historical utility averages, warranting a Hold stance until wider market mispricing emerges.1
Defensive Institutional Investor
Hold
Exclusive franchise rights and revenue decoupling mechanisms protect operating profitability (17.22% operating margin in FY2025), preserving capital against macroeconomic volatility while monitoring regulatory rate case milestones.5
§14 Recomendación finalEN
Acción
Mantener
Consolidated Edison is rated Hold at USD 103.39 as of October 2, 2026, offering 2.68% upside to our Fair value midpoint of USD 106.16. The utility benefits from an exclusive statutory monopoly across downstate New York and predictable rate base growth, but substantial debt of USD 28,320 million and high capital expenditures of USD 4,764 million in FY2025 limit near-term price appreciation.3
Income-oriented investors should preserve existing allocations to collect the durable dividend yield, while withholding new investment capital until rate case settlements provide greater margin clarity or market pricing offers a wider discount below Fair value.
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Sources
The records this analysis drew on, as they stood when it was run.
Not every cited input appears here: internal calculations and intermediate model outputs have no external record, and some citations could not be matched to one.
Sustained high benchmark yields inflate interest expense on scheduled debt refinancings
Urban construction cost escalation widens free cash flow deficits
Capital market access constraints restrict balance-sheet flexibility
In the bear scenario, adverse regulatory determinations and persistent macroeconomic pressures impair earnings growth. Growing customer bill sensitivity leads the commission to lower authorized return on equity and disallow urban infrastructure cost overruns. Simultaneously, sustained elevated benchmark yields escalate debt refinancing costs across extensive maturing obligations. Negative free cash flow forces additional debt issuance or equity dilution, compressing earnings growth and driving valuation toward lower downside boundaries.
Trigger
Within 18 months
NYPSC rate disallowance and urban network operating cost inflation
Reported FY2025 operating income of $2,935 million on $17,049 million revenue represents a 17.22% operating margin. If customer bill pushback leads the NYPSC to cut authorized ROE below 9.0% and disallow underground maintenance cost overruns, operating margin falling 300 bps below baseline would severely compress operating income below $2.5B.5
FV impact
0%
Operating margin 3 points lower throughout
Trigger
Within 24 months
Sector multiple derating under prolonged high capital intensity and yield competition
Current forward P/E stands at 16.08x, while the valuation synthesis assumes a 16.50x terminal multiple. If persistent free cash flow deficits ($36M in FY2025 vs $4,764M capex) and utility bond yield competition derate Con Edison to a 20% discount (to 13.20x, below peer XEL at 15.73x and DUK at 15.91x), terminal equity valuation compresses significantly.3,4
FV impact
-6.1%
Terminal multiple 20% lower
Trigger
Within 12 months
Comprehensive bear stagflation case with regulatory lag and capex cost escalation
The bear scenario models EPS growth slowing to 2.80% vs consensus 7.15% in FY2026 and 6.42% in FY2027. With $28,320 million of total debt and negative cumulative FCF requiring constant capital market access, regulatory lag would limit EPS compounding to 2.8%, pulling the fair value midpoint toward the bear case.1,3
FV impact
-2.1%
The analyst's bear scenario path and multiple as the base case
Severe urban network maintenance expense inflation and regulatory disallowance of operating cost pass-throughs compress operating income below $2,500 million.
Refinancing borrowing spreads remain contained, preserving net interest margins
In the bull scenario, assigned a probability of 20.0% with an implied return of 13.1% toward a target of $116.97, rate base capital deployment accelerates under favorable New York Public Service Commission rate case determinations. Authorized return on equity exceeds baseline expectations, while rapid clean energy transmission interconnections and efficiency gains lower operating costs per customer. Free cash flow conversion expands sooner than anticipated as major transmission projects achieve commercial operation, enabling faster earnings per share growth and supporting valuation toward $116.97.
Por qué importa
Regulatory decisions establish allowed return on equity and capital structure, directly setting the profit ceiling for transmission and distribution delivery tariffs.
ActualOperating cash flow provides robust multiple coverage of common dividend distributions, supported by steady non-discretionary utility billings.
Por qué importa
Regulated utility cash flow must comfortably cover dividend distributions while absorbing working capital swings, preserving payout safety without requiring external equity dilution.
ActualOperating margins reflect stable regulatory cost recovery mechanisms, though urban maintenance costs remain elevated relative to suburban peer utilities.
Por qué importa
Operating margins reflect cost management against inflation across dense urban infrastructure. Cost overruns not recoverable through fuel or commodity riders squeeze operating margins.
Dividends ($1,166M) rely temporarily on debt and equity capital market access until the reinvestment rate moderates toward steady-state levels post-2027.
Revenue decoupling and regulatory mechanisms protect cash flow durability against weather and volume swings
Cash flow predictability is exceptionally high, insulating earnings per share compounding from retail sales volume variances.
Substantial debt obligations heighten sensitivity to prevailing benchmark interest rates
Total debt stands at $28,320 million with pre-tax cost of debt at 6.41% in a 5.24% 10-year Treasury environment.
Refinancing maturing debt at current market rates will increase annual interest expense, requiring regulatory pass-through in rate cases to avoid margin compression.
American Electric Power Company Inc.AEP
Precio / valor razonable
Valor razonable128,93 US$Report-date price118,35 US$
Fecha de evaluación
Ventaja competitivaNarrow
Cuadro de mando de inversión54 / 100
Duke Energy CorporationDUK
Precio / valor razonable
Valor razonable124,95 US$Report-date price113,35 US$
Fecha de evaluación
Ventaja competitivaNarrow
Cuadro de mando de inversión53 / 100
Margen
ED
Consolidated Edison Inc.
$38.2B
16.1x
2.2x
10.6x
9.0%
—
XEL
Xcel Energy Inc.
$44.6B
15.7x
3.1x
13.8x
9.9%
22.7%
ETR
Entergy Corporation
$48.2B
19.8x
3.6x
14.1x
10.2%
24.5%
AEP
American Electric Power Company Inc.
$65.1B
17.4x
2.9x
13.2x
10.1%
23.3%
DUK
Duke Energy Corporation
$89.0B
15.9x
2.7x
11.0x
9.9%
27.5%
Higher baseline interest rate environment and debt refinancing costs
negative
Sustained high benchmark Treasury yields (5.24%) elevate utility borrowing costs on total debt ($28,320 million) and heighten yield competition for income-oriented utility equities.
> 2.50x on a trailing twelve-month basis
Assess whether capex overruns are receiving full NYPSC rate base inclusion or creating unrecoverable regulatory lag.3
