Consolidated Edison, Inc.

Analysis of Consolidated Edison (ED)

Technical Analysis ED has shown strong recent performance, significantly outperforming the market over the past three months. While its low beta suggests it is a defensive stock, its current price is near the top of its 52-week range, indicating it may be approaching overbought levels. Investors should be cautious of a near-term pullback despite the impressive momentum.

Fundamentals & Valuation The company demonstrated robust quarterly revenue growth and a sharp improvement in profitability margins. However, concerning liquidity metrics, such as a low interest coverage ratio, highlight financial risk. From a valuation standpoint, the forward P/E and very low PEG ratio suggest the stock is reasonably priced with potential for growth, making it attractive despite operational efficiency concerns.

Risk & Peer Comparison ED presents low volatility risk, reinforced by its minimal drawdown and lack of short interest, aligning with its defensive utility profile. While direct peer data is limited, its valuation multiples appear competitive within the utilities sector, though the high EV/EBITDA ratio may signal premium expectations.

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Investment Recommendation

Buy – Consolidated Edison offers a compelling blend of defensive attributes, reasonable valuation, and recent operational improvement. Its low beta and strong relative performance provide stability, while the attractive PEG ratio indicates undervaluation relative to growth prospects. However, investors should monitor its liquidity constraints and high valuation multiples closely. *This is not investment advice, for reference only.*

RockFlow Model Forecast: Three Scenarios for 2026

Based on the analysis provided, here is a 12-month outlook for Consolidated Edison (ED):

Looking ahead, key catalysts for ED include its defensive utility profile, which should remain attractive in an uncertain economic climate, and its reasonable valuation evidenced by an attractive PEG ratio, suggesting potential for earnings-driven growth. The primary risks investors should monitor are the company's concerning liquidity metrics, specifically the low interest coverage ratio indicating financial vulnerability, and the stock's current price trading near the top of its 52-week range, signaling a potential for a near-term pullback. While a specific analyst target was not provided, the fundamental valuation implies a stable outlook, with price performance likely to be driven more by its secure dividend yield and defensive characteristics than significant capital appreciation over the next year.

Wall Street Consensus

Most Wall Street analysts are optimistic about Consolidated Edison, Inc.'s 12-month outlook, with consensus target around $111.92, indicating expected upside potential.

Overall, ED has investment potential but also faces challenges. Here are key factors to weigh before investing.

ED has demonstrated strong outperformance with significant gains over the past three months, driven by its low-beta defensive characteristics.

Over the short term, ED has delivered impressive returns with a 7.64% one-month gain and 11.53% three-month return, outperforming the broader market by 11.27% during this period given its typically defensive nature. Despite its low beta of 0.388 suggesting muted volatility expectations, these returns represent substantial relative strength. The stock's current price of $111.74 positions it in the upper quartile of its 52-week range ($94.495 to $115.25), approximately 80% above its low. Considering the 52-week high is only about 3% away and the maximum drawdown of -15.79% indicates limited downside volatility, ED appears to be approaching overbought territory given its proximity to recent highs.

Revenue & Profitability ED's Q3 2025 revenue grew significantly to $4.53 billion from $3.60 billion in Q2, while its net profit margin improved markedly to 15.2% from 6.8%. The sharp rise in gross profit margin—from 50.8% to 79.1% quarter-over-quarter—reflects improved cost management or favorable pricing, though sustained performance should be monitored given utility sector volatility.

Financial Health The company maintains a moderate debt-to-equity ratio of 1.10, but its interest coverage ratio of 0.81 indicates operating income is insufficient to cover interest expenses, highlighting liquidity risk. With a low cash ratio of 0.04 and negative cash conversion cycle, ED depends heavily on operational cash flow and external financing to meet short-term obligations.

Operational Efficiency ED’s return on equity (ROE) stands at 2.85%, which is relatively low, and its asset turnover of 0.06 suggests inefficient utilization of assets to generate revenue. The utility’s fixed asset turnover of 0.08 aligns with its capital-intensive nature, but overall operational metrics indicate constrained efficiency and profitability relative to invested capital.

Valuation Level: ED appears reasonably valued based on its valuation multiples. While the trailing PE ratio of 20.21 suggests a modest premium, the forward PE of 13.2 indicates expected earnings growth that justifies current pricing. The exceptionally low PEG ratio of 0.07, reflecting strong growth-adjusted valuation, signals potential undervaluation given the company's growth prospects relative to its earnings multiple.

Peer Comparison: Without specific industry average data for comparison, definitive peer analysis cannot be established. However, ED's forward PE of approximately 13 would typically position it favorably within the utilities sector, which often trades at higher multiples due to stable cash flows and dividend yields. The elevated EV/EBITDA ratio of 23.5 suggests the market is pricing in premium operational characteristics relative to industry norms.

The stock exhibits very low volatility risk, with a beta of 0.388 indicating it is significantly less volatile than the broader market. This is corroborated by a relatively modest one-year maximum drawdown of -15.79%, suggesting limited downside fluctuation over the recent period.

The risk profile is further tempered by a complete absence of short interest, eliminating concerns regarding coordinated selling pressure from short sellers. The absence of this metric, however, may warrant confirmation of adequate liquidity to ensure orderly trading without significant price impact.