Assessing Consolidated Edison (ED) Valuation After Recent Share Price Pullback

Consolidated Edison (ED) shares have moved slightly this week, pulling back about 1% over the past month. Investors are keeping a close eye on recent trends and evaluating what may be next for the New York-based utility.

See our latest analysis for Consolidated Edison.

Consolidated Edison’s share price momentum has been fairly muted lately. However, if you zoom out, its three-year total shareholder return of about 29% shows that steady long-term growth is still in play, even as short-term price moves remain subdued.

If you’re interested in discovery opportunities beyond utilities, now could be an ideal time to broaden your investing outlook and uncover fast growing stocks with high insider ownership.

With a modest discount to analyst targets and long-term returns still outpacing recent gains, the key question emerges: is Consolidated Edison currently an undervalued play, or has the market already factored in its future potential?

Price-to-Earnings of 18.2x: Is it justified?

Consolidated Edison trades at a price-to-earnings (P/E) ratio of 18.2x, noticeably lower than both its peers and the industry average. With the last close at $97.64, this marks the stock as attractively valued relative to similar utility companies.

The price-to-earnings ratio compares a company’s share price to its earnings per share, helping investors assess whether the current price reflects growth prospects. For a utility like Consolidated Edison, P/E is especially relevant because earnings stability is key to the sector.

ED’s P/E sits below the peer average of 22.9x and the global integrated utilities industry average of 18.4x. This signals value appeal within its group. Compared to its estimated Fair Price-to-Earnings Ratio of 21.6x, the current valuation suggests the market could adjust higher if earnings performance continues.

Explore the SWS fair ratio for Consolidated Edison

Result: Price-to-Earnings of 18.2x (UNDERVALUED)

However, continued revenue growth depends on consistent earnings improvements and regulatory stability, and both factors could shift if market or policy dynamics change.

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

Another View: What Does the SWS DCF Model Say?

While the price-to-earnings approach suggests Consolidated Edison is undervalued compared to its peers and fair ratio, our DCF model offers another lens. It currently shows ED trading nearly at its estimated fair value, with shares priced at $97.64 versus a DCF-calculated fair value of $98.02. This suggests there is little room for immediate upside or downside based on forecast cash flows.

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 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

If you have a different perspective, or prefer to dig into the details yourself, you can easily build your own analysis in just a few minutes. 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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