Consolidated Edison Inc (ED)

Conclusion

Consolidated Edison is a regulated utility that delivers electricity, gas and steam to customers in New York City and Westchester County. At 118.39 USD on 2026-11-09, its market capitalisation is 43.94 billion USD and its enterprise value is 71.83 billion USD.

The verdict is fair. The fair value band runs from 109.67 to 164.51 USD, with a midpoint of 137.09 USD and a margin of safety of 15.8% at the current price. Today's P/E of 19.1 is close to its ten-year median of 19.0, and EV/EBITDA of 10.9 is close to its median of 10.9. The discounted cash flow value is 161.38 USD per share at a discount rate of 8.9%, while the fair value from historical multiples is 112.80 USD. The reverse DCF implies growth of 1.3% a year, against revenue growth of 6.7% a year over five years.

The strongest numbers are an operating margin of 18.7%, free cash flow conversion of 130.8% on a trailing twelve-month basis, and a dividend yield of 2.8%. The weakest are net debt to EBITDA of 4.2, an Altman Z-score of 1.24, and free cash flow conversion of -52.4% over five years. ROIC of 6.2% also sits below WACC of 6.9%, so the investment case depends on the company earning its cost of capital.

Financial health

Financial strength is red: the Altman Z-score and net debt to EBITDA are assessed bad, while interest coverage and the current ratio are neutral. Current ratio is 1.18 and quick ratio is 0.73. Net debt to EBITDA is 4.2 on a trailing basis, debt to equity is 1.06, and interest coverage is 3.4. The Altman Z-score of 1.24 falls in the distress zone, but that model was designed for manufacturers and this company is a utility, so the zone is a weak guide here. Insolvency risk: low, about 0.8% by the estimate of the Ohlson model over one to two years, based on data as of 2025-12-31. Leverage is the main pressure point, and it is high for the sector.

Earnings quality

Earnings quality is red, held back mainly by the five-year free cash flow conversion of -52.4%, which offsets the trailing figure of 130.8%. The accrual ratio is -3.8%, which is a low reading. Free cash flow after stock-based compensation is 3.00 billion USD, but stock-based compensation itself is not available for the company. Share count has risen at about 1.3% a year over five years, so the company has been issuing shares rather than buying them back. The Piotroski score is 6 out of 9. The Beneish M-score is not available. The company beat earnings estimates in six of the last eight quarters, with an average surprise of 3.2%. Estimate revisions are close to flat for the current year and the next year.

Profitability

Profitability is green, supported by an operating margin of 18.7% and a net margin of 12.7%, both assessed good. The operating margin sits slightly below its ten-year median of 20.5%, and the net margin is above its median of 11.0%. Gross margin is 50.8% against a median of 64.3%. ROIC is 6.2% against a WACC of 6.9%, a difference of -0.8% that is assessed neutral. The five-year median ROIC is 5.5%. The DuPont split shows a net margin of 12.0%, an asset turnover of 0.23 and an equity multiplier of 3.08. Return on equity of 8.7% therefore relies heavily on leverage rather than on high asset productivity.

Growth

Growth is yellow, because the earnings growth is assessed good but the revenue growth is only neutral. Revenue compounded at 2.6% over three years, 6.7% over five years and 3.1% over ten years. Earnings per share compounded at 6.5% over three years, 11.4% over five years and 3.4% over ten years. Revenue grew in six of the last ten years. Free cash flow per share fell at 18.3% a year over ten years. Consensus next-year earnings growth is 6.4%, so future growth looks similar to the recent mid-single-digit pace.

Valuation

Valuation is yellow, with the verdict assessed neutral at a margin of safety of 15.8%. The P/E is 19.1 against a ten-year median of 19.0, a premium of 1.0%. EV/EBITDA is 10.9 against a median of 10.9, a discount of 0.6%. Price to sales of 2.43 is 16.8% above its median of 2.08, and price to book of 1.67 is 9.3% above its median of 1.53. Free cash flow yield is 6.8% and earnings yield is 5.2%. The discounted cash flow value is 161.38 USD per share at a discount rate of 8.9% and terminal growth of 2.5%. The terminal value makes up 56.9% of that figure. The reverse DCF implies growth of 1.3%, against five-year revenue growth of 6.7%. The fair value from historical multiples is 112.80 USD. Dividend yield is 2.8%, the forward yield is 3.0%, and the payout on free cash flow is 41.2%. The fair values are estimates built on fixed assumptions, including a 5% equity risk premium and capped growth. They are not price targets.

Risks

Net debt to EBITDA of 4.2 means that a rise in borrowing costs or a fall in earnings would raise the pressure on the balance sheet, and interest coverage of 3.4 leaves limited room. The five-year free cash flow conversion of -52.4% shows that reported earnings have not reliably turned into cash, so cash generation is a key thing to watch. ROIC below WACC means that new investment must earn more than its cost to add value. Share issuance of about 1.3% a year dilutes existing holders. The discounted cash flow value depends heavily on the terminal value, which makes up 56.9% of it. Stock-based compensation and the Beneish M-score are not available. This analysis does not include a debt maturity schedule or revenue by segment, so refinancing risk and business mix cannot be assessed.