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Edison International: Is Selloff Because of Wildfires Justified?

2:33 pm ET, 06 Dec 2017

wildfires

Edison International (NYSE: EIX) stock dropped on Dec. 5 on worries about impacts from Southern California wildfires. Edison lost nearly $3 billion of market value that day, which may be excessive based on potential cash liabilities shareholders might face. 

Investors understandably are nervous, given the fire-related liabilities that Edison peers Sempra Energy and PG&E have experienced recently. News reports suggest the Southern California fires had destroyed 150 structures as of the morning of Dec. 5. 

Our perspective is, every $500 million of pretax cost net insurance recoveries would reduce Edison value by $1 per share. The Northern California fires in October destroyed approximately 8,900 structures, many within PG&E's service territory. 

PG&E value in our minds deteriorated based on an assumption that the company could face $5 billion of unrecovered pretax costs related to these fires. PG&E's stock is down 22% since the fires began, or about $8 billion of lost market value. 

The September 2015 Butte fire, also in PG&E's territory, destroyed 921 structures. PG&E has taken $1.1 billion of pretax charges to date and expects $922 million of insurance recoveries. 

Over the last year, EIX has returned +2.97%. This return is lower than Utilities sector (14.21%), Electric Utilities industry (15.02%), S&P 500 (19.27%) returns.

Finstead estimates that EIX price target upside is 15.83% (visit Finbot and type "EIX upside").

Edison International (EIX) Stock Guide

Updated at: 2:00 pm ET, 12 Jan 2021

Before we start: if you're looking for EIX stock price, you can quickly find it out by visiting Finny and typing "EIX quote". If you're looking for a quick scoop on EIX stock (chart, price target, market cap, news and buy or sell analysis), go to Finny and look for "EIX". You'll get all this info in one place. Or you can just type "EIX news" to get the latest stock news.

Looking to buy or sell Edison International (EIX)? Interested in getting the full scoop on EIX, including earnings and dividends, stock forecast, buy or sell analysis and key stats? If so, you came to the right place.

In this EIX stock guide, we'll address key questions about EIX, above and beyond what you can find on Yahoo Finance, Zacks, MarketWatch or Morningstar.

Here is what you'll be able to find in this guide:

Earnings and Dividends: earnings, earnings date, dividend rate and dividend yield;
Analysis: Finny Score and buy or sell analysis;
Key Stats: revenue, market cap, revenue growth, profit margin, P/E ratio, P/B ratio, industry, sector, and number of employees.

And here is the list of questions we'll answer:
1. What are EIX earnings?
2. When is EIX earnings date?
3. What is EIX dividend?
4. What is EIX dividend yield?
5. EIX buy or sell? What is EIX Finny Score?
6. What are the reasons to buy EIX? Why should I buy EIX stock?
7. What are the reasons to sell EIX? Why should I sell EIX stock?
8. What are EIX key stats: revenue, market cap, revenue growth, profit margin, P/E ratio, P/B ratio industry, sector, and number of employees?

So let's start. Scroll down to the question that interests you the most.

Earnings and Dividends

1. What are EIX earnings?

EIX trailing 12-month earnings per share (EPS) is $0.96.

2. When is EIX earnings date?

EIX earnings date is February 25, 2021.

3. What is EIX dividend?

EIX forward dividend is $2.65.

4. What is EIX dividend yield?

EIX forward dividend yield is 4.22%.

Analysis

5. EIX buy or sell? What is EIX Finny Score?

#{finnyScore:50}Our quantitative analysis shows 3 reasons to buy and 3 reasons to sell EIX, resulting in Finny Score of 50.

6. What are the reasons to buy EIX? Why should I buy EIX stock?

Here are the reasons to buy EIX stock:

  • With some $5 billion of planned annual investment for the foreseeable future, we project 7% annual earnings growth.
  • Edison has raised its dividend 61% since 2013 to $2.17 annualized in 2017, demonstrating management's commitment to meeting and maintaining a 45%-55% target payout ratio.
  • Increasing reliance on renewable energy and distributed generation in California should bolster investment opportunities in transmission and distribution upgrades for many years.
  • EIX quarterly revenue growth was 24.10%, higher than the industry and sector average revenue growth (0.41% and 0.68%, respectively). See EIX revenue growth chart.
  • EIX forward dividend yield is 4.22%, higher than the industry (1.28%) and sector (1.09%) forward dividend yields. See EIX forward dividend chart.
  • EIX forward P/E ratio is 13.78, which is low compared to its industry peers’ P/E ratios. See EIX forward P/E ratio chart.

7. What are the reasons to sell EIX? Why should I sell EIX stock?

Let's look at the reasons to sell EIX stock (i.e., the bear case):

  • Even with Edison's recent dividend hikes, its 50% payout ratio still trails its peers, and we don't expect management to raise its target anytime soon.
  • Edison's sector-leading growth outlook relies on California regulation remaining constructive and continued state-level interest in renewable energy, electric vehicles, and grid innovation.
  • Rising interest rates can depress market valuations for all regulated utilities as income alternatives become more attractive.
  • EIX profitability is declining. The YoY profit margin change was -6.46 percentage points. See EIX profitability chart.
  • EIX short interest (days to cover the shorts) ratio is 3.06. The stock garners more short interest than the average industry, sector or S&P 500 stock. See EIX short interest ratio chart.
  • EIX cash to debt ratio is 0.00, lower than the average industry (0.05) and sector (0.05) cash to debt ratio. See EIX cash to debt chart.

Key Stats

8. What are EIX key stats : revenue, market cap, revenue growth, profit margin, P/E ratio, P/B ratio industry, sector, and number of employees?

Let's look at the key statistics for EIX:

Metrics EIX
Price $61.91
Average Price Target / Upside N/A
Average Analyst Rating N/A
Forward Dividend Yield 4.19%
Industry Utilities - Regulated Electric
Sector Utilities
Number of Employees 12,574
Market Cap $23.33B
Forward P/E Ratio 13.52
Price/Book Ratio 1.74
Revenue (TTM) $13.39B
YoY Quarterly Revenue Growth 24.10%
Profit Margin 2.66%

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