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Edison International Hits 52-Week High on Regulatory Support - Analyst Blog

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On Aug 19, 2014, shares of Edison International ( EIX ) soared to a new 52-week high of $58.56. The stock pulled back a bit to end the trading session at $58.42 on that day. This utility company with a market cap of around $19 billion has seen its shares rise roughly 26.2% so far this year, outperforming the 7.2% gain of the S&P 500 over the same period.

What's Driving Edison International Up?

Rosemead, CA-based Edison International, through its subsidiaries, engages in the supply of electric energy in central, coastal and southern California. The company's chief unit - Southern California Edison or SCE - operates in a supportive regulatory environment, which would allow the utility to grow to stronger levels in a rebounding economy. Through 2017, SCE continues to target 7-9% average annual rate base and earnings growth driven by infrastructure investment.

The company is focused on its transmission and distribution infrastructural development programs. It expects to spend $15.1 billion to $17.2 billion for the period 2014 to 2017 under its capital investment plan. The plan mainly focuses on its distribution business. The company's second focus is on its transmission business, primarily to upgrade existing operations, construct new transmission lines as well as substations for system reliability. The utility is also keen on adding renewable assets to its portfolio.

The company's earnings surprise history looks unblemished over the trailing four quarters, with an average beat of 20.52%. The long-term earnings growth is pegged at 3.4%.

Edison International recently reported solid second quarter 2014 results with its adjusted earnings well ahead of the Street expectation by 30.1%. Earnings for the quarter also increased 36.7% from the year-ago figure. This striking performance reflects impressive results from its prime affiliate SCE backed by higher authorized revenues from rate base growth and income tax benefits.

The present valuation makes the shares of Edison International look attractive. The forward price/earnings (P/E) multiple of 14.7 is lower than the peer group average of 16.9, reflecting a discount of 13.0%. In addition, Return on Equity (ROE) of the company is 14.3%, higher than the peer group average of 10.9%, which indicates that funds are yielding better returns compared to its peers.

Edison International is a Zacks Rank #2 (Buy) stock. Other companies in the utility space worth considering include Consolidated Edison, Inc. ( ED ), CMS Energy Corp. ( CMS ) and Avista Corp. ( AVA ), all carrying the same rank as Edison International.

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AVISTA CORP (AVA): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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