A Look at Consolidated Edison’s (ED) Valuation Following Q3 Earnings Beat and Mixed Analyst Views

Consolidated Edison (ED) shares saw activity after the company reported third quarter results that surpassed Wall Street estimates for both earnings and revenue. The upbeat financials grabbed investor attention, even as analyst sentiment remained divided.

See our latest analysis for Consolidated Edison.

Consolidated Edison’s upbeat third quarter results have powered fresh momentum, helping the stock notch a 13.4% year-to-date share price return and an 8.8% total return over the past 12 months. Despite mixed analyst opinions and slight price target trims, the latest earnings surprise signals resilience and offers a confidence boost for longer-term investors.

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With shares hovering just below the average analyst price target and future earnings guidance in focus, investors now face a key question: is there hidden value left in Consolidated Edison, or has the market already factored in all its growth potential?

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

Consolidated Edison’s recent close at $100.95 is trading at a price-to-earnings ratio of 17.9x, which looks attractively valued relative to its peers. This suggests the market may not be fully pricing in the company’s recent earnings momentum and ongoing profitability.

The price-to-earnings (P/E) ratio compares a company's current share price to its per-share earnings. For utilities like Consolidated Edison, a reasonable P/E can hint at steady, reliable profits with limited earnings volatility. This makes it a key benchmark for value-oriented investors.

Consolidated Edison’s P/E ratio stands below the global integrated utilities industry average (18.2x), the US peer average (21.6x), the US market average (18.4x), and even its own estimated fair ratio (21.9x). This indicates a value gap the broader market could eventually recognize if earnings remain robust.

Explore the SWS fair ratio for Consolidated Edison

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

However, slower revenue growth or evolving regulatory pressures could temper future gains. This reminds investors that past performance does not guarantee continued outperformance.

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

Another View: What Does Our DCF Model Say?

While Consolidated Edison’s price-to-earnings ratio suggests undervaluation compared to peers and historical norms, our DCF model provides a different perspective. Based on SWS’s calculation, the shares trade slightly above their estimated fair value. This contrast raises a key question: is the market already pricing in all the upside, or is there still unexplored value?

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 874 undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Consolidated Edison Narrative

Bear in mind, if these conclusions differ from your own take or you want to dig into the numbers personally, you can put together your own view in just a few minutes as well: Do it your way.

A great starting point for your Consolidated Edison research is our analysis highlighting 4 key rewards and 2 important warning signs that could impact your investment decision.

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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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