COMPANY DESCRIPTION

Consolidated Edison, Inc. (Con Edison or the company) is a publicly-owned utility holding company, engaged in providing energy related products and services through its regulated and unregulated utility subsidiaries. The company operates in the US. It is headquartered in New York City, New York.

 

ECONOMIC MOAT

In our opinion ED’s economic moat comes from its stable, difficult-to-replicate wires-and-pipes monopoly in New York. In exchange for its service territory monopoly, the company's returns are set by state regulators.

 

OUTLOOK

Consolidated Edison Company of New York (CECONY) is seeking a rate hike of $368 million (7.2%), based on a return of 10% on a common-equity ratio of 48%. The utility is also asking for a higher allowed ROE. The board of directors has raised the dividend. The quarterly increase was $0.02 a share (3.2%). ConEd is targeting a payout ratio of 60%-70%. The dividend yield is slightly above the utility mean. However, we believe with the recent price rise puts the stock near fair value.

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STRENGTHS

  • Diversified customer base

  • Strong transmission and distribution facilities 

WEAKNESSES

  • Dependence on wholesale energy markets to meet supply needs

  • Dependence on subsidiaries 

THREATS

  • Environmental regulations

  • Volatile markets of electricity and natural gas

  • Operational risk 

OPPORTUNITIES

  • Agreements to develop solar energy 

The above report is for information purposes only, and is not a solicitation or offer to buy or sell any securities. Past performance is no guarantee of future performance. Neither diversification nor asset allocation ensures a profit or guarantees against loss. Before investing, investors should consider their risk tolerance, investment objectives, time horizon, available capital, and charges and expenses.  

 

The information presented in this report has been obtained from sources believed to be reliable, but accuracy and completeness cannot be guranteed. All material is subject to change without notice. The views and opinions expressed are those of Focused Stock Research and/or WALT ST Investment Management, Ltd. and in no way reflect the views and opinions of Investment Consultants nor their Broker Dealers.

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