Should Edison International’s (EIX) $1.66 Billion Preferred Stock Buyback Reshape Investor Perspectives?

• Edison International recently announced cash tender offers to purchase any and all outstanding Series A and Series B Fixed-Rate Reset Cumulative Perpetual Preferred Stock, with an aggregate liquidation preference of over US$1.66 billion, set to expire on December 19, 2025.
• This move is designed to optimize the company's capital structure and could reduce its outstanding preferred stock liabilities, potentially lowering its future cost of capital.
• We'll examine how this preferred stock buyback using cash on hand could reshape Edison International's overall investment thesis and risk profile.

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Edison International Investment Narrative Recap

To own Edison International, investors need conviction in the long-term electrification trend across California, as ongoing policy and infrastructure upgrades continue to drive electricity demand and support rate base growth. The recent preferred stock buyback, aiming to optimize capital structure and reduce future financing costs, does not materially affect the company's top near-term catalyst: regulatory decisions around rate cases and wildfire cost recovery. However, it also does not significantly mitigate the immediate risk of unresolved wildfire liabilities or associated regulatory uncertainty, which could still pressure profitability. Among company announcements, the recent quarterly earnings release stands out, reflecting revenue and net income growth over the prior year despite challenging operating conditions. While this underscores Edison’s ability to generate earnings amid adversity, it should be viewed alongside the persistent risks of regulatory change and wildfire-related expenses, which remain central to the investment thesis. However, investors should also be aware that even with improvements to the balance sheet, significant wildfire liability exposure remains...

Read the full narrative on Edison International (it's free!)

Edison International's narrative projects $20.4 billion in revenue and $2.4 billion in earnings by 2028. This is based on a 5.2% yearly revenue growth rate, but a decrease in earnings of $0.2 billion from current earnings of $2.6 billion.

Uncover how Edison International's forecasts yield a $67.37 fair value, a 15% upside to its current price.

Exploring Other Perspectives

Four Simply Wall St Community fair value estimates for Edison International range from US$52.50 to US$103.07 per share. While opinions differ on valuation, the continued regulatory uncertainty and legal risks mean readers should consider a full spectrum of views.

Explore 4 other fair value estimates on Edison International - why the stock might be worth as much as 76% more than the current price!

Build Your Own Edison International Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your Edison International research is our analysis highlighting 3 key rewards and 4 important warning signs that could impact your investment decision.
• Our free Edison International research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate Edison International's overall financial health at a glance.

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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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