EIX

Based on a comprehensive review, EIX presents a compelling case for investment, supported by strong momentum, defensive qualities, and attractive valuation metrics, though certain risks require consideration.

From a technical perspective, EIX shows impressive strength, having significantly outperformed the market with substantial recent gains. Its low beta confirms this advance has been achieved with lower volatility, reinforcing its defensive profile. While trading near 52-week highs suggests limited short-term upside, the momentum and stability are positive signs.

Fundamentally, the company exhibits robust health with strong sequential revenue growth and a notable expansion in net profit margin. Its moderate debt levels and sufficient interest coverage point to a stable financial footing, which is crucial for a utility. The modest return on equity is typical for the capital-intensive sector, but efficient working capital management is a operational strength.

Valuation presents a mixed but overall favorable picture; the stock appears deeply undervalued based on its exceptionally low PEG ratio, signaling strong growth potential relative to its price. The high EV/EBITDA ratio is a point of caution but is common for utilities with significant infrastructure assets. The primary risks involve sensitivity to market downturns, as seen in its maximum drawdown, and sector-specific factors like regulatory changes.

Recommendation: BUY EIX is a attractive investment for investors seeking a defensive stock with growth potential. Its combination of strong price momentum, healthy profitability, and compelling earnings-based valuation outweighs concerns about its cash flow multiples. The stock is well-suited for a portfolio seeking stability and income, albeit with awareness of utility-sector risks. This recommendation is for reference only and not investment advice.

RockFlow Model Forecast: Three Scenarios for 2026

Based on a comprehensive review, here is a 12-month outlook for EIX (Edison International):

12-Month Outlook for EIX:

EIX's positive outlook is primarily driven by its defensive qualities as a regulated utility and its compelling earnings growth potential, as indicated by a deeply undervalued PEG ratio. Key catalysts include continued operational efficiency leading to strong profitability and stable revenue growth from its core regulated operations. Potential risks center on sensitivity to broader market downturns and sector-specific pressures, particularly regulatory changes that could impact rate structures or capital investment plans. While a specific analyst target is unavailable, the combination of momentum, valuation, and defensive profile suggests a stable to moderately positive performance is likely over the next year, barring significant negative regulatory developments.

Wall Street Consensus

Most Wall Street analysts are optimistic about EIX's 12-month outlook, with consensus target around $61.62, indicating expected upside potential.

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

EIX has delivered strong outperformance with substantial gains over recent months while maintaining its characteristic lower volatility relative to the market.

Over the past three months, EIX has surged 14.34%, significantly outperforming the market by nearly 11 percentage points, with solid 4.75% gains in the most recent month demonstrating continued momentum. The stock's beta of 0.829 confirms this strength has been achieved with below-market volatility, highlighting its defensive characteristics during this advance.

Currently trading at $60.68, EIX sits near the upper end of its 52-week range, approximately 85% above its low and just 5% below its high of $63.97. While not technically overbought, the stock has recovered substantially from its maximum drawdown of nearly 23% and appears to be testing resistance levels near its yearly peak.

Revenue & Profitability: EIX demonstrated strong sequential improvement in Q3 2025, with revenue increasing 26.6% quarter-over-quarter to $5.75 billion. This translated to significantly enhanced profitability, with net profit margin expanding from 8.8% to 15.4%, driven by a substantial improvement in operating income. The company's ability to convert revenue growth into bottom-line performance appears healthy this quarter.

Financial Health: The company maintains a moderate debt profile with a debt ratio of 43.6% and a debt-to-equity ratio of 2.3. Cash flow generation is solid, with operating cash flow covering 37% of revenue, though the cash ratio remains low at 0.05. Interest coverage of 2.9x indicates sufficient earnings to service debt obligations.

Operational Efficiency: EIX's return on equity of 5.2% reflects modest efficiency in generating profits from shareholder equity. Asset utilization remains low with an asset turnover of just 0.06, which is typical for capital-intensive utilities. The negative cash conversion cycle of -3.1 days suggests efficient working capital management, allowing the company to fund operations through supplier credit.

Based on the provided metrics, EIX appears undervalued on an earnings basis but warrants caution on cash flow. The trailing and forward PE ratios are low (7.25 and 6.0), and the remarkably low PEG ratio of 0.04 suggests the stock is deeply undervalued relative to its expected earnings growth. However, the elevated EV/EBITDA of nearly 25 indicates the enterprise value is high compared to operating cash flow, which is a point of concern for a utility.

A direct peer comparison cannot be performed due to the unavailability of industry average data. Therefore, the valuation conclusion is based solely on EIX's absolute metrics, highlighting its attractive earnings multiples but also its premium valuation based on cash flow. This mixed signal is common in capital-intensive sectors like utilities, where high debt levels can inflate the EV/EBITDA ratio.

Volatility Risk: With a Beta of 0.829, EIX exhibits less volatility than the broader market, suggesting lower systematic risk. However, the one-year maximum drawdown of -22.93% indicates a notable sensitivity to market downturns, representing a significant potential loss for investors. Overall, its profile is that of a defensive but not immune equity.

Other Risks: The apparent absence of short interest implies strong market conviction in the stock's stability and limited perceived downside risk from bearish bets. As a utility stock, EIX's primary risks are more likely tied to regulatory changes, interest rate fluctuations, and operational performance rather than speculative trading or liquidity concerns.