Edison International
EIX
$54.95
-0.65%
Edison International is the parent holding company of Southern California Edison, a regulated electric utility that delivers electricity to roughly 5 million customers across a 50,000-square-mile service territory in Southern California, complemented by a small nonutility energy services arm, Edison Energy. As one of the largest investor-owned utilities in the United States, EIX occupies a defensive, rate-base-driven niche within the Regulated Electric industry, where earnings growth is largely a function of capital investment, authorized returns, and regulatory outcomes rather than volume or pricing power. The current investor narrative is dominated by a severe wildfire-liability overhang: California legislation that would have capped utility wildfire exposure failed to pass ahead of an August 31 deadline, triggering a roughly 24% single-day collapse in the stock on August 31, 2026, a downgrade, and renewed debate over SCE's potential legal and financial exposure to catastrophic fire claims. This regulatory and legal uncertainty, layered on top of an already elevated debt load and negative trailing free cash flow, has shifted the market's focus from the utility's steady rate-base growth story to a binary question of whether California's liability framework will ultimately protect or impair shareholder capital.…
EIX
Edison International
$54.95
Related headlines
Investment Opinion: Should I buy EIX Today?
The synthesized recommendation is Hold, with a clear thesis that EIX's deep valuation discount (5.18x trailing PE, 1.31x P/B, 5.96% yield) is offset by an unresolved, binary wildfire-liability risk that makes the risk/reward roughly balanced at current levels. The 14-analyst consensus is 'hold' with a mean of 3.06, and the average target of $67.14 implies 21.4% upside, but the $50.00 low target sits below the current $55.31 price, reflecting genuine disagreement on the core liability question. Until California's legislative or legal framework provides clarity, the stock is best characterized as a special situation rather than a straightforward value play.
Supporting evidence for the Hold rating includes: (1) Q1 2026 revenue of $4.103 billion grew 7.66% year over year, demonstrating steady rate-base expansion; (2) Q1 2026 net income of $570 million on a 13.89% net margin, with gross margin of 76.36% and EBITDA margin of 49.45%, confirms the underlying utility remains profitable; (3) the 5.18x trailing PE and 1.31x P/B are far below typical utility ranges of 15x–20x and 1.5x–2.0x, implying substantial upside if the liability overhang resolves; and (4) the 5.96% dividend yield, while elevated versus the historical 1.0%–1.7% range, provides meaningful income if sustained. However, these positives are counterbalanced by 71.14% debt to capitalization, -$643 million trailing free cash flow, and a 0.729 current ratio that leave limited financial flexibility.
The biggest risks that could invalidate the thesis are: (1) an adverse wildfire-liability outcome that forces equity dilution or a dividend cut; (2) further credit deterioration given the already-elevated 2.42x debt-to-equity and negative FCF; and (3) continued negative momentum, with the stock at just 6.9% of its 52-week range and relative strength versus the S&P 500 at -38.14% over 6 months. This Hold would upgrade to Buy if California enacts a liability cap or if the stock stabilizes above $60 with improving credit metrics, and would downgrade to Sell if the stock breaks below the $52.00 52-week low or if a major adverse legal ruling emerges. On valuation, EIX is deeply discounted relative to both its own history (P/B above 1.9x in late 2024) and utility peers, but the discount is fundamentally justified by genuine tail risk — the stock is cheap for a reason, and the market is correctly demanding a large risk premium until the liability question is resolved.
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EIX 12-Month Price Forecast
EIX presents a classic deep-value-with-tail-risk profile: the underlying utility generates steady 7.66% revenue growth and 49.45% EBITDA margins, yet trades at a 5.18x PE and 1.31x P/B because the market is pricing in a genuine, unresolved wildfire-liability risk that has already erased 24% of market value in a single day. The 5.96% dividend yield and 21.4% upside to the average analyst target of $67.14 are attractive, but the $50.00 low target and -$643 million trailing free cash flow underscore the downside if the liability framework remains unresolved or deteriorates. With the stock at just 6.9% of its 52-week range and relative strength versus the S&P 500 at -38.14% over 6 months, momentum is deeply negative, and the low beta of 0.614 has been overwhelmed by event risk. I would upgrade to bullish if California enacts a liability cap or if the stock stabilizes above $60 with improving credit metrics, and downgrade to bearish if the stock breaks below $52.00 or if a major adverse legal or regulatory development emerges.
Wall Street consensus
Most Wall Street analysts maintain a constructive view on Edison International's 12-month outlook, with a consensus price target around $66.79 and implied upside of +21.5% versus the current price.
Average Target
$66.79
0 analysts
Implied Upside
+21.5%
vs. current price
Analyst Count
—
covering this stock
Price Range
$50 - $86
Analyst target range
Coverage on Edison International is moderate, with 14 analysts contributing to the consensus. The recommendation distribution skews cautious — the consensus recommendation is "hold" with a recommendation mean of 3.06 (on a scale where 1 is strong buy and 5 is strong sell) — and the average price target of $67.14 implies roughly +21.4% upside from the current price of $55.31. That headline upside looks attractive, but it must be read against the fact that the average target is likely stale relative to the August 31 legislative shock: the most recent institutional actions show Barclays maintaining Overweight on July 14, 2026, Truist and JP Morgan holding Neutral in mid-May, and Morgan Stanley maintaining Underweight on April 21, while Ladenburg Thalmann downgraded to Sell from Neutral on March 5 and Seaport Global cut to Neutral from Buy on April 20 — a clear pattern of deteriorating sentiment well before the crash. The consensus is therefore best characterized as neutral-to-cautious with a bullish price target that has not yet fully caught up to the new liability reality. The target range is wide — $50.00 low to $86.00 high, a spread of $36 or roughly 65% of the current share price — which signals high uncertainty rather than strong conviction. The $86.00 high target implicitly assumes a benign resolution to the wildfire-liability question, full restoration of the regulatory compact, continued rate-base growth, and multiple expansion back toward historical utility norms; the $50.00 low target, which sits below the current $55.31 price and near the $52.00 52-week low, prices in an adverse liability outcome, credit deterioration, potential equity dilution, and further multiple compression. The wide dispersion, combined with the recent downgrade activity and the fact that the low target is below the current price, indicates that the analyst community is divided on the most important variable — California wildfire liability — and that the stock's forward path will be driven far more by legislative and legal developments than by quarterly earnings execution.
Bulls vs Bears: EIX Investment Factors
The bear case currently holds stronger evidence: the unresolved wildfire-liability framework is a genuine, binary tail risk that has already destroyed 24% of market value in a single day and driven the stock to the bottom of its 52-week range. The bull case rests on valuation and mean reversion — a 5.18x PE, 1.31x P/B, and 5.96% yield are historically extreme discounts — but these discounts are fundamentally justified by 71% debt-to-capitalization, negative free cash flow, and the possibility of catastrophic legal claims. The single most important tension is whether California ultimately provides a liability cap or other protection for SCE; a favorable resolution would likely trigger a violent re-rating toward the $67–$86 analyst range, while an adverse outcome could push the stock below its $52.00 low toward the $50.00 bear target or lower. Until that legislative and legal question is resolved, the risk/reward is asymmetric to the downside despite superficially attractive multiples.
Bullish
- Deep valuation discount to utility norms: EIX trades at a trailing PE of 5.18x and a price-to-book of 1.31x, versus typical regulated utility ranges of 15x–20x earnings and 1.5x–2.0x book. The 5.96% dividend yield is roughly 3.5x its historical 1.0%–1.7% range, signaling an extreme risk premium that could compress sharply if the wildfire-liability overhang resolves favorably.
- Analyst target implies 21% upside: The 14-analyst average price target of $67.14 sits 21.4% above the current $55.31, and the high target of $86.00 implies 55% upside. Even the consensus 'hold' rating (mean 3.06) reflects a neutral stance rather than outright bearishness, suggesting the sell-off may have overshot fundamental value.
- Steady rate-base revenue growth: Q1 2026 revenue of $4.103 billion grew 7.66% year over year, continuing a low-to-mid-single-digit expansion driven by SCE's regulated rate base. The Electric Utility segment contributed $3.731 billion of the total, providing highly predictable, recession-resistant cash flows.
- Strong operating profitability: Q1 2026 gross margin was 76.36%, operating margin 26.18%, and EBITDA margin 49.45%, with net income of $570 million on a 13.89% net margin. These are healthy utility-level margins that demonstrate the underlying business remains fundamentally sound despite the equity sell-off.
Bearish
- Wildfire liability legislation failed: California legislation to cap utility wildfire exposure failed ahead of the August 31 deadline, triggering a 24% single-day collapse from $70.17 to $53.98. This leaves SCE exposed to potentially catastrophic legal claims with no statutory liability cap, a binary risk that could impair or wipe out shareholder equity.
- Severe negative momentum and relative weakness: EIX is down 24.69% over 1 month, 23.06% over 3 months, and 20.70% over 6 months, with relative strength versus the S&P 500 at -23.73%, -25.06%, and -38.14% across those windows. The stock sits at just 6.9% of its 52-week range, and the August 31 gap represents a structural trend break, not a routine pullback.
- Elevated leverage and negative free cash flow: Debt-to-equity is 2.42x, total debt to capitalization is 71.14%, and the current ratio is a thin 0.729. Trailing twelve-month free cash flow is -$643 million, with Q1 2026 FCF of -$112 million after $1.539 billion of capex against $1.427 billion of operating cash flow, leaving the utility dependent on external financing that could be jeopardized by wildfire liabilities.
- Earnings volatility and one-time distortions: Quarterly EPS has swung wildly from $3.73 in Q1 2025 to $0.89 in Q2 2025, $2.16 in Q3 2025, $4.80 in Q4 2025, and $1.38 in Q1 2026, while Q4 2025 gross margin printed -7.90% on a negative gross profit of -$412 million. This volatility makes normalized earnings difficult to estimate and undermines the reliability of the 5.18x trailing PE.
EIX Technical Analysis
Edison International is in a severe downtrend that has overwhelmed what had been a constructive multi-month recovery. The stock's 1-year price change of -0.49% masks a violent path: shares rallied from a March 2026 low near $67.94 to a July 22 peak of $80.38, only to collapse to $55.31 by September 18. At $55.31, the stock sits at roughly 6.9% of its 52-week range (52-week low of $52.00, high of $81.62), meaning it is trading just above the bottom of its annual band — a positioning that typically signals either deep value or an unresolved falling-knife situation, and given the catalyst (legislative failure on wildfire liability), the latter interpretation currently dominates. The 1-month change of -24.69% and 3-month change of -23.06% confirm that momentum is sharply negative and accelerating to the downside, with the August 31 gap from $70.17 to $53.98 representing a structural break in the trend rather than a routine pullback. Relative strength versus the S&P 500 is deeply negative across every window — -23.73% over 1 month, -25.06% over 3 months, and -38.14% over 6 months — while SPY gained 15.01% over the past year, underscoring that this is idiosyncratic, company-specific risk rather than broad market weakness. The stock has stabilized in a $54–$59 range since early September, suggesting short-term capitulation may be exhausting, but the absence of any meaningful bounce off the $52.00 52-week low keeps the near-term bias defensive. Key support rests at the $52.00 52-week low, and a decisive breakdown below that level would open the door to a new leg lower with no historical reference points; resistance is stacked at $59–$60 (the early-September consolidation ceiling), then the $70 area (the pre-crash platform), with the $81.62 52-week high now a distant recovery target. With a beta of just 0.614, EIX is structurally about 39% less volatile than the broader market on a normal basis, which ordinarily supports larger position sizes for risk-budgeted investors — but the wildfire-liability event has temporarily decoupled the stock from its historical low-beta profile, as evidenced by the -32.84% max drawdown and the single-day 24% gap, meaning realized event risk is far higher than the beta implies.
Beta
0.61
0.61x market volatility
Max Drawdown
-32.8%
Largest decline past year
52-Week Range
$52-$82
Price range past year
Annual Return
-1.2%
Cumulative gain past year
| Period | EIX Return | S&P 500 |
|---|---|---|
| 1m | -23.2% | +1.0% |
| 3m | -24.7% | +5.4% |
| 6m | -22.8% | +17.8% |
| 1y | -1.2% | +16.5% |
| ytd | -9.8% | +13.4% |
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EIX Fundamental Analysis
Edison's revenue trajectory remains modestly constructive at the top line, even as the equity story deteriorates. Most recent quarterly revenue (Q1 2026, ended March 31, 2026) was $4.103 billion, up 7.66% year over year from $3.811 billion in Q1 2025, continuing a pattern of low-to-mid-single-digit growth driven by rate-base expansion and cost recovery. The multi-quarter trend is choppy but upward: revenue progressed from $4.336 billion in Q2 2024 to $5.201 billion in Q3 2024, $3.984 billion in Q4 2024, $3.811 billion in Q1 2025, $4.543 billion in Q2 2025, $5.750 billion in Q3 2025, $5.213 billion in Q4 2025, and $4.103 billion in Q1 2026, with the sequential pattern reflecting normal utility seasonality rather than any demand deterioration. Segment data shows the Electric Utility contributing $3.731 billion of the total, with Competitive Power Generation at $340 million and Parent and Other at -$1 million, confirming that essentially all economics flow through the regulated utility and that the investment case is a pure play on SCE's regulatory compact. Profitability is solid on paper: Q1 2026 net income was $570 million on a 13.89% net margin, with gross profit of $3.133 billion (76.36% gross margin), operating income of $1.074 billion (26.18% operating margin), and EBITDA of $2.029 billion (49.45% EBITDA margin) — healthy figures for a regulated utility. However, the quarterly earnings record is highly volatile and distorted by one-time items: EPS swung from $3.73 in Q1 2025 to $0.89 in Q2 2025, $2.16 in Q3 2025, $4.80 in Q4 2025, and $1.38 in Q1 2026, while gross margin printed -7.90% in Q4 2025 due to a negative gross profit of -$412 million, illustrating how legal, wildfire, and other non-recurring charges can overwhelm the underlying rate-base economics. The balance sheet is the central fundamental risk: debt-to-equity stands at 2.42x, total debt to capitalization is 71.14%, long-term debt to capitalization is 68.30%, and the current ratio is a thin 0.729, leaving limited near-term liquidity cushion. Free cash flow is deeply negative — trailing twelve-month FCF of -$643 million, with Q1 2026 FCF of -$112 million after $1.539 billion of capital expenditure against $1.427 billion of operating cash flow — meaning the utility is dependent on external financing to fund its investment program, a structure that is normal for rate-base growth but becomes precarious when wildfire liabilities threaten credit access. ROE of 25.92% and ROA of 4.09% look strong, but the elevated ROE is flattered by the high leverage (equity multiplier above 5x) rather than by exceptional asset productivity, and the interest coverage ratio of roughly 2.05x leaves little margin for earnings shocks.
Quarterly Revenue
$4.1B
2026-03
Revenue YoY Growth
+7.7%
YoY Comparison
Gross Margin
76.4%
Latest Quarter
Free Cash Flow
$-643000000.0B
Last 12 Months
Revenue & Net Income Trends (2 Years)
Revenue Breakdown
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Valuation Analysis: Is EIX Overvalued?
Because Edison International is profitable — Q1 2026 net income of $570 million and trailing EPS of $0.197 — the appropriate primary metric is the price-to-earnings ratio, and here the picture is superficially striking: the trailing PE is just 5.18x while the forward PE is 8.51x. The unusual inversion (forward PE above trailing PE) reflects the fact that trailing earnings are inflated by one-time items, particularly the $1.845 billion Q4 2025 net income and $4.80 quarterly EPS, while forward estimates of $7.32 per share imply normalized earnings power; the market is therefore not paying 5x for sustainable earnings but rather pricing in substantial uncertainty about what normalized earnings will actually be once wildfire liabilities are resolved. On a price-to-book basis, EIX trades at 1.31x, and its price-to-sales ratio of 1.20x and EV/EBITDA of 7.95x are the more reliable cross-checks given the earnings distortion. Peer comparison is constrained by the absence of a sector-average dataset in the provided valuation inputs, but contextually, regulated electric utilities typically trade in the 15x–20x trailing PE range and 1.5x–2.0x book range; EIX's 5.18x trailing PE and 1.31x P/B represent a dramatic discount to those norms, a spread that on its face looks like deep value but is more accurately a risk premium for wildfire liability, below-investment-grade-adjacent credit metrics (71% debt to capitalization), and negative free cash flow. The 1.31x P/B is particularly telling — utilities rarely trade below book unless the market questions the recoverability of assets or the sustainability of the equity base, and the current multiple sits near the low end of EIX's own historical range. Historical ratios confirm the compression: the PE ratio has fallen from 13.26x in Q1 2026 to 3.13x in Q4 2025 and now 5.18x, while P/B has declined from 1.63x in Q1 2026 to 1.31x currently, versus readings above 1.9x in late 2024 and 2.15x in Q3 2024. The stock is therefore near the bottom of its own historical valuation band on both earnings and book metrics, which historically would signal a value opportunity — but in this case the de-rating is fundamentally justified by a genuine, unresolved tail risk, and the dividend yield of 5.96% (versus a historical 1.0%–1.7% range) is the clearest market signal that investors are demanding a large risk premium for holding the equity.
PE
5.2x
Latest Quarter
vs. Historical
Low-End
5-Year PE Range 3x~25x
vs. Industry Avg
N/A
Industry PE ~N/A*
EV/EBITDA
7.9x
Enterprise Value Multiple
Investment Risk Disclosure
Financial and operational risks are substantial and quantifiable. Debt-to-equity stands at 2.42x with total debt to capitalization at 71.14%, and the current ratio of 0.729 leaves minimal near-term liquidity cushion. Trailing twelve-month free cash flow is -$643 million, with Q1 2026 capex of $1.539 billion exceeding operating cash flow of $1.427 billion, meaning SCE must continually access external capital markets to fund its rate-base investment program — a structure that becomes precarious if wildfire liabilities threaten credit ratings or market access. Interest coverage of roughly 2.05x (operating income of $1.074 billion against $524 million of quarterly interest expense) leaves little margin for earnings shocks, and the 25.92% ROE is flattered by leverage rather than asset productivity, with ROA of just 4.09%. Revenue is effectively a pure play on SCE's regulatory compact, with the Electric Utility contributing $3.731 billion of Q1 2026's $4.103 billion total, so any adverse regulatory ruling or liability outcome directly impairs essentially all of the company's economics.
Market and competitive risks center on valuation compression and regulatory/legal uncertainty. EIX's beta of 0.614 ordinarily implies ~39% less volatility than the market, but the August 31 event decoupled the stock from its historical low-beta profile, producing a -32.84% max drawdown and a 24% single-day gap that demonstrates realized event risk far exceeds what beta implies. The stock trades at a 5.18x trailing PE and 1.31x P/B — deep discounts to the 15x–20x and 1.5x–2.0x utility norms — but these discounts reflect a genuine risk premium rather than mispricing, and further multiple compression is possible if liability exposure escalates. Recent news highlights the systemic nature of the threat: PG&E also fell 8% on August 28 ahead of the failed legislative deadline, indicating that California's wildfire-liability framework is an industry-wide overhang that could trigger sector-wide de-rating. The 5.96% dividend yield, versus a historical 1.0%–1.7% range, is the market's clearest signal that investors demand a large risk premium, and any dividend cut to preserve liquidity would likely accelerate the sell-off.
In a worst-case scenario, an adverse legal ruling or a major wildfire event attributed to SCE equipment could produce liabilities exceeding the company's insurance and available capital, forcing equity dilution, credit downgrades, and a dividend suspension. The chain would likely unfold as follows: a catastrophic fire claim or court judgment, followed by rating agency downgrades that raise borrowing costs and restrict capital access, then a dilutive equity raise that crushes per-share value, and finally a dividend cut that removes the primary support for the stock. Quantifying the downside, the 52-week low of $52.00 sits 6.0% below the current $55.31, and the analyst low target of $50.00 implies 9.6% downside; however, in a true tail scenario where liabilities exceed the equity base, the stock could fall well below those levels, with the -32.84% max drawdown from the 52-week high of $81.62 serving as a reminder of how quickly capital can be destroyed. From the current price, a move to the $50.00 bear target represents a 9.6% loss, while a re-test of the $52.00 low implies a 6.0% decline — but investors should recognize that the true worst case is not bounded by these technical levels if the liability framework remains unresolved.
FAQ
The most severe risk is wildfire liability: California's failure to cap utility exposure leaves SCE vulnerable to catastrophic legal claims, a risk that already caused a 24% single-day decline and could force equity dilution or a dividend cut. Second is financial risk, with debt-to-equity of 2.42x, 71.14% debt to capitalization, a 0.729 current ratio, and -$643 million trailing free cash flow leaving limited flexibility and dependence on external financing. Third is earnings volatility, with quarterly EPS swinging from $0.89 to $4.80 and Q4 2025 gross margin at -7.90%, making normalized earnings difficult to estimate. Fourth is market and momentum risk, with the stock at 6.9% of its 52-week range, relative strength versus the S&P 500 at -38.14% over 6 months, and a $36 analyst target spread (65% of share price) signaling deep disagreement. Ranked by severity, the wildfire-liability outcome dominates, followed by credit/financial risk, then earnings quality, then momentum.
The 12-month forecast is divided into three scenarios: a base case (50% probability) of $60–$70, assuming no catastrophic wildfire event and no adverse ruling, with the stock stabilizing and partially recovering toward the $67.14 analyst average; a bull case (25% probability) of $75–$86, requiring California to enact a liability cap or cost-recovery mechanism that restores the regulatory compact and allows multiple expansion toward the $86.00 high target; and a bear case (25% probability) of $40–$52, triggered by an adverse legal ruling, major wildfire, or credit downgrade that forces dividend cuts or dilutive equity issuance. The base case is most likely, with the key assumption being that the liability question remains unresolved but no new catastrophe occurs, allowing the 5.96% dividend yield and steady rate-base growth to support the stock. The wide $36 target spread reflects genuine uncertainty, and the path will be driven far more by legislative and legal developments than by quarterly earnings.
EIX appears deeply undervalued on traditional metrics: a 5.18x trailing PE, 8.51x forward PE, 1.31x price-to-book, 1.20x price-to-sales, and 7.95x EV/EBITDA, all well below typical regulated utility ranges of 15x–20x earnings and 1.5x–2.0x book. The 5.96% dividend yield is roughly 3.5x its historical 1.0%–1.7% range, and P/B has fallen from above 1.9x in late 2024 to 1.31x now. However, this discount is not a simple mispricing — it is a risk premium for unresolved wildfire liability, elevated leverage (71.14% debt to capitalization), and negative free cash flow (-$643 million TTM). The market is pricing in substantial uncertainty about normalized earnings and the sustainability of the equity base, so the stock is cheap relative to history and peers but fairly valued once the binary liability risk is incorporated. A favorable liability resolution would likely trigger significant multiple expansion.
EIX is a high-risk, high-reward special situation rather than a straightforward buy. The stock trades at 5.18x trailing earnings and 1.31x book — deep discounts to utility norms — with a 5.96% dividend yield and 21.4% upside to the $67.14 average analyst target, but these discounts reflect a genuine, unresolved wildfire-liability risk that caused a 24% single-day crash on August 31, 2026. The $50.00 analyst low target sits below the current $55.31 price, and the stock is at just 6.9% of its 52-week range with -$643 million trailing free cash flow and 71.14% debt to capitalization. For risk-tolerant value investors who believe California will ultimately provide liability protection, the risk/reward is attractive; for income or conservative investors, the binary legal risk and potential dividend cut make it unsuitable. A good entry would require either legislative clarity on liability caps or a stabilization above $60 with improving credit metrics.
EIX is best suited for long-term, risk-tolerant value investors with a minimum holding period of 2–3 years, because the core thesis depends on resolution of California's wildfire-liability framework, which is a multi-year legislative and legal process. The stock's beta of 0.614 suggests lower volatility in normal times, but the -32.84% max drawdown and 24% single-day crash show that event risk currently overwhelms the low-beta profile, making short-term trading extremely dangerous. The 5.96% dividend yield provides income support if maintained, but the payout ratio of 30.24% and negative free cash flow mean the dividend is not risk-free. Short-term traders could attempt to trade the $52–$60 range, but the binary nature of the liability catalyst makes timing difficult. A long-term investor should size positions conservatively given the tail risk and monitor legislative developments as the primary driver of returns.