ED

Based on the comprehensive analysis, here is the investment assessment for ED:

Technical Analysis ED exhibits the classic characteristics of a defensive utility stock with low volatility. While showing recent strength, its position in the lower half of its 52-week range suggests it lacks strong momentum. The technical picture points to a stable but unexciting profile, suitable for investors seeking lower-risk exposure.

Fundamentals & Risk The fundamentals present a mixed but concerning picture. Despite recent margin improvement and solid revenue, the critically low interest coverage ratio of 0.81 is a major red flag, indicating earnings cannot comfortably service its debt. While its low beta offers defensive stability, the underlying financial health is pressured by significant interest expenses, creating a precarious balance between operational stability and financial risk.

Valuation ED's valuation sends conflicting signals. The attractive forward P/E and exceptionally low PEG ratio suggest strong growth-adjusted value. However, the high EV/EBITDA multiple of 23.5 implies the enterprise value is rich relative to its cash flow, a significant consideration for a capital-intensive utility.

Buy Recommendation

ED is not recommended for purchase at this time. The stock's primary appeal is its defensive, low-volatility nature, but this is heavily overshadowed by a critical weakness in its financial health. The dangerously low interest coverage ratio poses a substantial risk to its stability, making it unsuitable for most investors despite its seemingly reasonable valuation on some metrics. Investors should wait for clear signs of improved balance sheet management before considering a position.

RockFlow Model Forecast: Three Scenarios for 2026

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

12-Month Outlook for ED

The primary catalyst for ED will be its ability to demonstrate improved financial health by increasing its interest coverage ratio through debt reduction or stronger earnings, which could rebuild investor confidence. As a regulated utility, its revenue remains relatively stable, but the outlook is clouded by the significant risk posed by its critically low interest coverage ratio of 0.81, indicating severe strain from debt obligations. Given the mixed signals from valuation metrics and the overriding concern of financial risk, the stock is likely to remain range-bound with a high degree of volatility related to interest rate sentiment. In the absence of a clear analyst target, a prudent 12-month price range would be +/- 10% from the current level (~$90 to ~$110), heavily dependent on management's actions to shore up the balance sheet.

Wall Street Consensus

Most Wall Street analysts are optimistic about ED's 12-month outlook, with consensus target around $101.47, indicating expected upside potential.

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

ED has demonstrated mixed performance with recent strength offset by modest weakness over a slightly longer timeframe. The stock shows low volatility characteristics consistent with its utility sector profile.

The stock has delivered solid 4.78% gains over the past month but remains down 0.59% over three months, underperforming the broader market by nearly 4% during that period. ED's low beta of 0.379 confirms its defensive nature, experiencing less volatility than the overall market.

Currently trading at $100.21, EDU sits in the lower half of its 52-week range ($88.26-$114.87), approximately 16% above its yearly low but 13% below its high. Given the maximum drawdown of -15.79% and current positioning, the stock appears to be in neutral territory rather than significantly overbought or oversold.

Revenue & Profitability: ED's Q3 2025 results show a significant improvement from Q2, with revenue increasing to $4.53 billion and the net profit margin more than doubling to 15.2%. However, the operating profit margin of 21.4% for the quarter is substantially impacted by high interest expenses, indicating profitability is pressured by financing costs. The improved gross profit ratio of 79.1% suggests effective cost control on core operations.

Financial Health: The company's financial health shows mixed signals, with a reasonable debt-to-equity ratio of 1.10 but concerning liquidity metrics including a low cash ratio of 0.04. Most notably, the interest coverage ratio of 0.81 indicates operating income is insufficient to cover interest obligations, posing a significant risk to financial stability and requiring close monitoring.

Operational Efficiency: ED demonstrates weak operational efficiency with low asset turnover of 0.06 and a modest return on equity of 2.85%, suggesting suboptimal utilization of both assets and shareholder capital. The negative cash conversion cycle of -35 days is a positive operational feature, indicating the company collects from customers before paying suppliers, though this is offset by poor overall capital efficiency metrics.

Valuation Level: ED appears moderately valued based on traditional metrics, with a forward P/E of 13.2 suggesting improved earnings expectations compared to the trailing multiple of 17.5. The P/B ratio of 1.48 and P/S ratio of 2.15 reflect reasonable asset and sales valuations, while the exceptionally low PEG ratio of 0.07 indicates strong growth-adjusted value. However, the elevated EV/EBITDA of 23.5 suggests the enterprise value may be somewhat rich relative to operating cash flows.

Peer Comparison: Without specific industry benchmark data, a comprehensive peer comparison cannot be provided. The valuation assessment must therefore rely solely on absolute metrics rather than relative positioning within the utilities sector. For a complete analysis, comparative industry multiples would be necessary to contextualize ED's valuation against sector norms.

Based on the metrics provided, ED demonstrates very low volatility risk relative to the broader market. Its exceptionally low Beta of 0.379 indicates the stock is significantly less volatile than the market, meaning it is expected to be more stable during market swings. The maximum drawdown of -15.79% over the past year, while a notable decline, is moderate for an individual stock and aligns with the profile of a lower-risk, defensive equity.

The absence of reported short interest is a strong positive, suggesting that professional investors do not see a compelling near-term case for the stock's price to fall. This significantly mitigates the risk of a sharp downturn driven by a short squeeze or concentrated selling pressure. Furthermore, while not provided here, a utility stock like ED typically carries risks related to regulatory changes, interest rate fluctuations affecting its debt-heavy capital structure, and operational challenges from extreme weather events, rather than technical market risks like poor liquidity.