On Friday, Guggenheim maintained a Neutral rating on shares of Consolidated Edison (NYSE:ED) but increased the stock's price target to $99 from $96. This adjustment follows the company's third-quarter results, which outperformed consensus expectations. Consolidated Edison also revised its lower end 2024 earnings per share (EPS) guidance upwards by $0.10, now forecasting $5.30 to $5.40.
The improved financial outlook is attributed to more stable weather compared to initial plans and some advanced visibility on Earnings Adjustment Mechanisms (EAMs). Moreover, the third-quarter disclosures highlighted progress on the Orange & Rockland (O&R) settlement, which is nearing completion.
Updates also included a constructive peak load forecast for Consolidated Edison of New York (CECONY) and O&R, as well as Federal Energy Regulatory Commission (FERC) formula settlements on the right of first refusal (ROFR), Public Policy Transmission Needs (PPTN), and Climate Leadership and Community Protection Act (CLCPA) projects.
According to the company's disclosures, all PPTN projects have successfully passed the viability stage. Further determinations and awards for these projects are expected in the latter half of 2025. Moreover, the company has removed references to longer-term equity needs from its disclosures and reverted to providing prompt year guidance on financing. However, management indicated that the current plan assumptions remain unchanged.
Consolidated Edison's stock valuation continues to command a premium relative to its peer group, largely due to constructive regulatory attributes, such as the potential for a higher return on equity (ROE) at CECONY.
The analyst's stance remains cautious but acknowledges possible positive influences from the impending O&R settlement and additional capital expenditures from PPTN, NY Transco, and other projects, which are factored into the revised price target of $99.
In other recent news, Consolidated Edison has announced its intention to redeem $224.6 million in tax-exempt debt, a move that aligns with the company's debt management strategy. The debt redemption, scheduled for November 2024, involves four subseries of debt originally issued by a subsidiary of Consolidated Edison, Consolidated Edison Company of New York, Inc.
Recent financial developments also include the company's Q2 2024 earnings report, where it reported an adjusted EPS of $0.59 and an operating revenue of $3.22 billion, primarily driven by increased cooling demand during a heat wave. Operations and maintenance expenses, however, saw a 13.9% increase compared to the same period last year.
In terms of analyst ratings, the company saw its stock rating upgraded from Neutral to Buy by a Citi analyst, while Jefferies initiated coverage with a Hold rating. BofA Securities also raised its price target for Consolidated Edison from $97.00 to $109.00, maintaining a Buy rating.
Other recent developments include the New York State Department of Public Service supporting rate cases for Consolidated Edison's subsidiary Orange & Rockland, and the appointment of Kirkland B. Andrews as the new CFO of Consolidated Edison.
InvestingPro Insights
Consolidated Edison's recent performance and future outlook align with several key metrics and insights from InvestingPro. The company's P/E ratio of 18.99 suggests a relatively moderate valuation, which is consistent with the premium valuation noted in the article.
This premium is likely supported by Consolidated Edison's strong dividend history, as highlighted by two InvestingPro Tips: the company has raised its dividend for 50 consecutive years and has maintained dividend payments for 54 consecutive years. These facts underscore the utility's financial stability and commitment to shareholder returns.
The current dividend yield of 3.4% and a dividend growth rate of 2.47% in the last twelve months further illustrate the company's attractiveness to income-focused investors. This aligns with the article's mention of the company's constructive regulatory attributes and potential for higher returns.
InvestingPro Data shows a revenue of $14.81 billion over the last twelve months, with a gross profit margin of 52.5% and an operating income margin of 22.2%. These figures reflect the company's solid financial performance, which supports the upward revision of its 2024 EPS guidance mentioned in the article.
For readers interested in a more comprehensive analysis, InvestingPro offers 7 additional tips for Consolidated Edison, providing deeper insights into the company's financial health and market position.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.