Assessing Edison International’s valuation after a 6% dividend increase and renewed investor attention
Edison International (EIX) just raised its quarterly dividend to $0.8775 per share, lifting the annual payout to $3.51, a 6% increase that underscores management’s confidence in the utility’s cash generation and long term outlook.
See our latest analysis for Edison International.
That confidence boost comes after a choppy stretch for the stock, with the latest share price at $58.32 and a steep year to date share price return of minus 27.11%. Even so, the five year total shareholder return of 19.85% shows longer term holders have still come out ahead, suggesting sentiment may be stabilizing rather than collapsing.
If Edison’s mix of income and moderate growth appeals to you, this might be a good moment to explore other regulated utilities and nearby sectors through fast growing stocks with high insider ownership.
Yet with Edison trading at a sizable discount to analyst targets and a meaningful intrinsic value gap, investors are left weighing whether this dividend hike signals a mispriced recovery or if the market already anticipates all the future growth.
Most Popular Narrative Narrative: 13.4% Undervalued
With the narrative fair value sitting meaningfully above Edison International’s last close at $58.32, the valuation case leans toward a discounted regulated utility rebuilding earnings power.
Significant state and federal investment, along with policy momentum for decarbonization, will underwrite large-scale grid modernization and renewable energy integration projects, providing Edison International with stable, above inflation capital expenditure opportunities and growing its regulated rate base, supporting earnings and rate base driven revenue growth.
Curious how steady top line expansion, thinner profit margins and a higher future earnings multiple can still point to upside from here? Unpack the full playbook behind this fair value call and see which long term assumptions really move the needle.
Result: Fair Value of $67.37 (UNDERVALUED)
Have a read of the narrative in full and understand what's behind the forecasts.
However, lingering wildfire liabilities and shifting California regulation could still derail earnings visibility and compress the valuation multiple if outcomes disappoint.
Find out about the key risks to this Edison International narrative.
Build Your Own Edison International Narrative
If this view does not quite fit your own, you can dive into the numbers, shape your perspective, and Do it your way in under three minutes.
A great starting point for your Edison International research is our analysis highlighting 3 key rewards and 4 important warning signs that could impact your investment decision.
Ready for more investment ideas?
Before you move on, lock in your next smart move by scanning a few hand picked stock ideas on Simply Wall Street that most investors overlook.
- Target dependable income by reviewing these 13 dividend stocks with yields > 3% that could strengthen your portfolio’s cash flow without stretching for risky yields.
- Capitalize on structural growth by assessing these 25 AI penny stocks positioned at the heart of the artificial intelligence revolution.
- Upgrade your value shortlist by checking these 915 undervalued stocks based on cash flows that may be trading below their intrinsic worth based on cash flows.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com