On Wednesday, Edison International (NYSE:EIX) received a revised stock price target from Argus, with the new target set at $97, up from the previous $82, while the firm maintained a Buy rating on the stock. The adjustment reflects a positive view of the company's prospects, particularly its Southern California Edison (SCE) electric utility segment.
In their commentary, Argus highlighted the expected sector growth in 2024, anticipating it to follow historical trends and benefit from decreasing interest rates. Edison International is recognized for its strong position in a supportive regulatory environment, a robust balance sheet, and a substantial residential customer base in suburban Southern California.
The company's leadership in renewable energy and the high sales of electric vehicles (EVs) in the state are seen as factors that will likely drive increased demand for electricity.
The company has made significant strides in sustainability by eliminating coal from its energy mix and generating a considerable portion of its electricity from nuclear, solar, wind, and hydropower sources. Notably, Edison International does not operate natural gas facilities.
Despite experiencing a year with lower incidences of wildfires, Edison has previously faced considerable legal challenges and expenses related to wildfire damage in California. The firm has settled with California regulators for fires in 2018 but still needs to address remaining wildfire claims and the associated costs.
Looking ahead, if further regulatory rate recovery is approved, Edison International could witness substantial earnings growth in the years 2024 and 2025. The stock's valuation is deemed favorable when compared to industry peers, using metrics such as P/E, price/sales, and PEG multiples. Edison International offers a dividend yield of approximately 3.6%, which is higher than the average of its peers.
In other recent news, Edison International reported a second quarter core EPS of $1.23 for 2024, aligning with expectations and maintaining its 2024 core EPS guidance of $4.75 to $5.05. Moreover, Southern California Edison, a subsidiary of Edison International, is seeking to recover approximately $1.6 billion from $2.7 billion in losses incurred due to wildfires and mudslides in 2017 and 2018. This proposed settlement is pending approval by the California Public Utilities Commission.
In analyst updates, Mizuho raised its price target for Edison International shares to $94 from $85, maintaining an Outperform rating on the stock. This adjustment was influenced by an improved price-to-earnings valuation and the increased likelihood of recovering the TKM liabilities.
Similarly, Evercore ISI increased its price target for Edison International shares to $88.00 from $82.00, also maintaining an Outperform rating. This adjustment was driven by a positive outlook on a favorable General Rate Case outcome and potential TKM case settlement.
In other company developments, Edison International is experiencing faster-than-expected load growth within its service area, presenting opportunities for capital reallocation and additional investments. The company is also planning incremental capital opportunities with the forthcoming NextGen ERP filing and the Advanced Metering Infrastructure 2.0 application projected for 2025. These are recent developments in the company's ongoing efforts to navigate the evolving energy landscape.
InvestingPro Insights
Edison International (NYSE:EIX) is currently navigating the financial landscape with a notable market capitalization of $32.68 billion, reflecting its substantial presence in the utility sector. Investors closely monitoring the company's performance will find that despite a slight revenue decline of 2.05% in the last twelve months as of Q2 2024, Edison International has maintained a strong gross profit margin of 59.33%. This level of profitability is further underscored by an operating income margin of 23.09%, indicating efficient management of its operational costs.
One of the InvestingPro Tips highlights Edison International's significant debt burden, which is an important consideration for investors assessing the company's financial health. However, the company's commitment to shareholder returns is evident, as it has raised its dividend for 18 consecutive years and maintained dividend payments for 21 consecutive years. This consistency is reflected in a dividend yield of 3.69% and a dividend growth of 5.76% over the last twelve months as of Q2 2024, signaling confidence in its financial stability and future prospects.
For investors seeking additional insights, there are numerous other InvestingPro Tips available, including analysis on earnings revisions and stock volatility. With six analysts having revised their earnings downwards for the upcoming period, it's important to consider the potential impact on future performance. To explore these insights further, Edison International investors can access a wealth of additional tips on InvestingPro.
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