Intrinsic value of Consolidated Edison - ED

Previous Close

$83.44

  Intrinsic Value

$49.92

stock screener

  Rating & Target

sell

-40%

  Value-price divergence*

-19%

Previous close

$83.44

 
Intrinsic value

$49.92

 
Up/down potential

-40%

 
Rating

sell

 
Value-price divergence*

-19%

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of ED stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2016), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 25.6

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  -3.82
  2.30
  2.57
  2.81
  3.03
  3.23
  3.41
  3.57
  3.71
  3.84
  3.95
  4.06
  4.15
  4.24
  4.31
  4.38
  4.44
  4.50
  4.55
  4.59
  4.64
  4.67
  4.70
  4.73
  4.76
  4.78
  4.81
  4.83
  4.84
  4.86
  4.87
Revenue, $m
  10,984
  12,353
  12,670
  13,027
  13,422
  13,855
  14,327
  14,837
  15,388
  15,978
  16,610
  17,284
  18,002
  18,765
  19,574
  20,432
  21,340
  22,300
  23,315
  24,386
  25,516
  26,709
  27,965
  29,289
  30,683
  32,151
  33,697
  35,323
  37,033
  38,833
  40,725
Variable operating expenses, $m
 
  9,968
  10,223
  10,509
  10,826
  11,175
  11,554
  11,964
  12,406
  12,881
  13,388
  13,887
  14,464
  15,077
  15,727
  16,416
  17,146
  17,917
  18,732
  19,593
  20,501
  21,459
  22,469
  23,532
  24,653
  25,832
  27,074
  28,380
  29,755
  31,200
  32,721
Fixed operating expenses, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total operating expenses, $m
  9,500
  9,968
  10,223
  10,509
  10,826
  11,175
  11,554
  11,964
  12,406
  12,881
  13,388
  13,887
  14,464
  15,077
  15,727
  16,416
  17,146
  17,917
  18,732
  19,593
  20,501
  21,459
  22,469
  23,532
  24,653
  25,832
  27,074
  28,380
  29,755
  31,200
  32,721
Operating income, $m
  2,575
  2,385
  2,447
  2,518
  2,595
  2,680
  2,773
  2,873
  2,982
  3,098
  3,222
  3,397
  3,538
  3,688
  3,847
  4,016
  4,194
  4,383
  4,582
  4,793
  5,015
  5,249
  5,496
  5,757
  6,031
  6,319
  6,623
  6,942
  7,279
  7,632
  8,004
EBITDA, $m
  3,791
  2,712
  2,782
  2,860
  2,947
  3,042
  3,145
  3,257
  3,378
  3,508
  3,647
  3,795
  3,952
  4,120
  4,297
  4,486
  4,685
  4,896
  5,119
  5,354
  5,602
  5,864
  6,140
  6,430
  6,736
  7,059
  7,398
  7,755
  8,130
  8,526
  8,941
Interest expense (income), $m
  664
  662
  698
  737
  780
  827
  880
  937
  999
  1,066
  1,137
  1,214
  1,295
  1,382
  1,474
  1,572
  1,676
  1,786
  1,903
  2,025
  2,155
  2,292
  2,436
  2,589
  2,749
  2,918
  3,095
  3,283
  3,479
  3,687
  3,904
Earnings before tax, $m
  1,943
  1,723
  1,749
  1,781
  1,815
  1,853
  1,893
  1,936
  1,983
  2,032
  2,085
  2,184
  2,243
  2,306
  2,373
  2,443
  2,518
  2,597
  2,680
  2,768
  2,860
  2,957
  3,060
  3,168
  3,282
  3,402
  3,527
  3,660
  3,799
  3,946
  4,100
Tax expense, $m
  698
  465
  472
  481
  490
  500
  511
  523
  535
  549
  563
  590
  606
  623
  641
  660
  680
  701
  724
  747
  772
  798
  826
  855
  886
  918
  952
  988
  1,026
  1,065
  1,107
Net income, $m
  1,245
  1,258
  1,277
  1,300
  1,325
  1,353
  1,382
  1,414
  1,447
  1,483
  1,522
  1,594
  1,637
  1,683
  1,732
  1,784
  1,838
  1,896
  1,956
  2,020
  2,088
  2,159
  2,234
  2,313
  2,396
  2,483
  2,575
  2,672
  2,773
  2,880
  2,993

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  776
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  48,255
  48,633
  49,883
  51,286
  52,841
  54,547
  56,404
  58,415
  60,582
  62,907
  65,394
  68,048
  70,874
  73,877
  77,064
  80,441
  84,016
  87,796
  91,791
  96,008
  100,459
  105,152
  110,099
  115,311
  120,801
  126,580
  132,664
  139,066
  145,801
  152,885
  160,335
Adjusted assets (=assets-cash), $m
  47,479
  48,633
  49,883
  51,286
  52,841
  54,547
  56,404
  58,415
  60,582
  62,907
  65,394
  68,048
  70,874
  73,877
  77,064
  80,441
  84,016
  87,796
  91,791
  96,008
  100,459
  105,152
  110,099
  115,311
  120,801
  126,580
  132,664
  139,066
  145,801
  152,885
  160,335
Revenue / Adjusted assets
  0.231
  0.254
  0.254
  0.254
  0.254
  0.254
  0.254
  0.254
  0.254
  0.254
  0.254
  0.254
  0.254
  0.254
  0.254
  0.254
  0.254
  0.254
  0.254
  0.254
  0.254
  0.254
  0.254
  0.254
  0.254
  0.254
  0.254
  0.254
  0.254
  0.254
  0.254
Average production assets, $m
  2,776
  2,841
  2,914
  2,996
  3,087
  3,187
  3,295
  3,413
  3,539
  3,675
  3,820
  3,975
  4,140
  4,316
  4,502
  4,699
  4,908
  5,129
  5,362
  5,609
  5,869
  6,143
  6,432
  6,736
  7,057
  7,395
  7,750
  8,124
  8,518
  8,932
  9,367
Working capital, $m
  -437
  -124
  -127
  -130
  -134
  -139
  -143
  -148
  -154
  -160
  -166
  -173
  -180
  -188
  -196
  -204
  -213
  -223
  -233
  -244
  -255
  -267
  -280
  -293
  -307
  -322
  -337
  -353
  -370
  -388
  -407
Total debt, $m
  15,828
  15,865
  16,739
  17,720
  18,807
  19,999
  21,298
  22,703
  24,218
  25,843
  27,581
  29,436
  31,412
  33,511
  35,739
  38,099
  40,598
  43,241
  46,033
  48,981
  52,092
  55,372
  58,830
  62,473
  66,311
  70,351
  74,603
  79,078
  83,786
  88,737
  93,945
Total liabilities, $m
  33,957
  33,994
  34,868
  35,849
  36,936
  38,128
  39,427
  40,832
  42,347
  43,972
  45,710
  47,565
  49,541
  51,640
  53,868
  56,228
  58,727
  61,370
  64,162
  67,110
  70,221
  73,501
  76,959
  80,602
  84,440
  88,480
  92,732
  97,207
  101,915
  106,866
  112,074
Total equity, $m
  14,298
  14,638
  15,015
  15,437
  15,905
  16,419
  16,978
  17,583
  18,235
  18,935
  19,684
  20,482
  21,333
  22,237
  23,196
  24,213
  25,289
  26,427
  27,629
  28,899
  30,238
  31,651
  33,140
  34,709
  36,361
  38,101
  39,932
  41,859
  43,886
  46,018
  48,261
Total liabilities and equity, $m
  48,255
  48,632
  49,883
  51,286
  52,841
  54,547
  56,405
  58,415
  60,582
  62,907
  65,394
  68,047
  70,874
  73,877
  77,064
  80,441
  84,016
  87,797
  91,791
  96,009
  100,459
  105,152
  110,099
  115,311
  120,801
  126,581
  132,664
  139,066
  145,801
  152,884
  160,335
Debt-to-equity ratio
  1.107
  1.080
  1.110
  1.150
  1.180
  1.220
  1.250
  1.290
  1.330
  1.360
  1.400
  1.440
  1.470
  1.510
  1.540
  1.570
  1.610
  1.640
  1.670
  1.690
  1.720
  1.750
  1.780
  1.800
  1.820
  1.850
  1.870
  1.890
  1.910
  1.930
  1.950
Adjusted equity ratio
  0.301
  0.301
  0.301
  0.301
  0.301
  0.301
  0.301
  0.301
  0.301
  0.301
  0.301
  0.301
  0.301
  0.301
  0.301
  0.301
  0.301
  0.301
  0.301
  0.301
  0.301
  0.301
  0.301
  0.301
  0.301
  0.301
  0.301
  0.301
  0.301
  0.301
  0.301

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  1,245
  1,258
  1,277
  1,300
  1,325
  1,353
  1,382
  1,414
  1,447
  1,483
  1,522
  1,594
  1,637
  1,683
  1,732
  1,784
  1,838
  1,896
  1,956
  2,020
  2,088
  2,159
  2,234
  2,313
  2,396
  2,483
  2,575
  2,672
  2,773
  2,880
  2,993
Depreciation, amort., depletion, $m
  1,216
  327
  334
  342
  351
  361
  372
  384
  397
  410
  425
  398
  414
  432
  450
  470
  491
  513
  536
  561
  587
  614
  643
  674
  706
  739
  775
  812
  852
  893
  937
Funds from operations, $m
  3,862
  1,585
  1,611
  1,643
  1,677
  1,714
  1,754
  1,798
  1,844
  1,894
  1,947
  1,992
  2,051
  2,115
  2,182
  2,254
  2,329
  2,408
  2,493
  2,581
  2,675
  2,773
  2,877
  2,986
  3,101
  3,223
  3,350
  3,484
  3,625
  3,774
  3,930
Change in working capital, $m
  403
  -3
  -3
  -4
  -4
  -4
  -5
  -5
  -6
  -6
  -6
  -7
  -7
  -8
  -8
  -9
  -9
  -10
  -10
  -11
  -11
  -12
  -13
  -13
  -14
  -15
  -15
  -16
  -17
  -18
  -19
Cash from operations, $m
  3,459
  1,587
  1,614
  1,646
  1,681
  1,718
  1,759
  1,803
  1,850
  1,900
  1,953
  1,998
  2,059
  2,123
  2,190
  2,262
  2,338
  2,418
  2,503
  2,592
  2,686
  2,785
  2,890
  3,000
  3,115
  3,237
  3,366
  3,500
  3,642
  3,792
  3,948
Maintenance CAPEX, $m
  0
  -278
  -284
  -291
  -300
  -309
  -319
  -330
  -341
  -354
  -368
  -382
  -398
  -414
  -432
  -450
  -470
  -491
  -513
  -536
  -561
  -587
  -614
  -643
  -674
  -706
  -739
  -775
  -812
  -852
  -893
New CAPEX, $m
  -5,158
  -66
  -73
  -82
  -91
  -100
  -109
  -117
  -127
  -136
  -145
  -155
  -165
  -175
  -186
  -197
  -209
  -221
  -233
  -246
  -260
  -274
  -289
  -304
  -321
  -338
  -355
  -374
  -393
  -414
  -435
Cash from investing activities, $m
  -4,976
  -344
  -357
  -373
  -391
  -409
  -428
  -447
  -468
  -490
  -513
  -537
  -563
  -589
  -618
  -647
  -679
  -712
  -746
  -782
  -821
  -861
  -903
  -947
  -995
  -1,044
  -1,094
  -1,149
  -1,205
  -1,266
  -1,328
Free cash flow, $m
  -1,517
  1,244
  1,257
  1,273
  1,290
  1,310
  1,332
  1,356
  1,382
  1,410
  1,440
  1,461
  1,496
  1,533
  1,573
  1,615
  1,659
  1,706
  1,756
  1,809
  1,865
  1,924
  1,986
  2,052
  2,121
  2,194
  2,271
  2,351
  2,436
  2,526
  2,620
Issuance/(repayment) of debt, $m
  1,380
  813
  874
  981
  1,087
  1,192
  1,299
  1,406
  1,514
  1,625
  1,739
  1,855
  1,975
  2,099
  2,228
  2,361
  2,499
  2,643
  2,792
  2,948
  3,111
  3,281
  3,458
  3,643
  3,837
  4,040
  4,252
  4,475
  4,708
  4,952
  5,207
Issuance/(repurchase) of shares, $m
  753
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  2,108
  813
  874
  981
  1,087
  1,192
  1,299
  1,406
  1,514
  1,625
  1,739
  1,855
  1,975
  2,099
  2,228
  2,361
  2,499
  2,643
  2,792
  2,948
  3,111
  3,281
  3,458
  3,643
  3,837
  4,040
  4,252
  4,475
  4,708
  4,952
  5,207
Total cash flow (excl. dividends), $m
  591
  2,057
  2,131
  2,254
  2,377
  2,502
  2,630
  2,761
  2,896
  3,035
  3,179
  3,316
  3,471
  3,632
  3,800
  3,975
  4,158
  4,349
  4,549
  4,757
  4,976
  5,205
  5,444
  5,695
  5,958
  6,234
  6,523
  6,826
  7,144
  7,478
  7,828
Retained Cash Flow (-), $m
  -1,246
  -340
  -376
  -422
  -468
  -513
  -559
  -605
  -652
  -700
  -749
  -799
  -851
  -904
  -959
  -1,017
  -1,076
  -1,138
  -1,202
  -1,269
  -1,340
  -1,413
  -1,489
  -1,569
  -1,652
  -1,740
  -1,831
  -1,927
  -2,027
  -2,132
  -2,242
Prev. year cash balance distribution, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  1,717
  1,755
  1,831
  1,909
  1,989
  2,071
  2,156
  2,244
  2,335
  2,430
  2,517
  2,621
  2,728
  2,841
  2,959
  3,082
  3,211
  3,346
  3,488
  3,636
  3,792
  3,955
  4,126
  4,306
  4,494
  4,692
  4,899
  5,117
  5,345
  5,585
Discount rate, %
 
  8.00
  8.40
  8.82
  9.26
  9.72
  10.21
  10.72
  11.26
  11.82
  12.41
  13.03
  13.68
  14.37
  15.09
  15.84
  16.63
  17.46
  18.34
  19.25
  20.22
  21.23
  22.29
  23.40
  24.57
  25.80
  27.09
  28.45
  29.87
  31.36
  32.93
PV of cash for distribution, $m
 
  1,590
  1,493
  1,421
  1,340
  1,251
  1,156
  1,057
  956
  854
  754
  654
  562
  476
  397
  326
  263
  208
  162
  123
  92
  67
  47
  33
  22
  14
  9
  6
  3
  2
  1
Current shareholders' claim on cash, %
  100
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

Consolidated Edison, Inc., through its subsidiaries, engages in regulated electric, gas, and steam delivery businesses in the United States. The company offers electric services to approximately 3.4 million customers in New York City and Westchester County; gas to approximately 1.1 million customers in Manhattan, the Bronx, parts of Queens, and Westchester County; and steam to approximately 1,649 customers in parts of Manhattan. It also supplies electricity to approximately 0.3 million customers in southeastern New York, and northern New Jersey; and gas to approximately 0.1 million customers in southeastern New York. The company operates 532 circuit miles of transmission lines; 15 transmission substations; 62 distribution substations; 85,514 in-service line transformers; 3,913 pole miles of overhead distribution lines; and 1,764 miles of underground distribution lines, as well as 1,865 miles of mains and 104,748 service lines for natural gas distribution. In addition, it owns, operates, and develops renewable and energy infrastructure projects; and provides energy-related products and services to wholesale and retail customers, as well as invests in electric and gas transmission projects. It primarily sells electricity to industrial, commercial, residential, and governmental customers. Consolidated Edison, Inc. was founded in 1884 and is based in New York, New York.

FINANCIAL RATIOS  of  Consolidated Edison (ED)

Valuation Ratios
P/E Ratio 20.4
Price to Sales 2.1
Price to Book 1.8
Price to Tangible Book
Price to Cash Flow 7.4
Price to Free Cash Flow -15
Growth Rates
Sales Growth Rate -3.8%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 53.8%
Cap. Spend. - 3 Yr. Gr. Rate 13.7%
Financial Strength
Quick Ratio 1
Current Ratio 0.2
LT Debt to Equity 103.1%
Total Debt to Equity 110.7%
Interest Coverage 4
Management Effectiveness
Return On Assets 3.6%
Ret/ On Assets - 3 Yr. Avg. 3.5%
Return On Total Capital 4.3%
Ret/ On T. Cap. - 3 Yr. Avg. 4.4%
Return On Equity 9.1%
Return On Equity - 3 Yr. Avg. 9.1%
Asset Turnover 0.3
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 0%
EBITDA Margin 31.7%
EBITDA Margin - 3 Yr. Avg. 28.4%
Operating Margin 21.3%
Oper. Margin - 3 Yr. Avg. 19.1%
Pre-Tax Margin 16.1%
Pre-Tax Margin - 3 Yr. Avg. 14.4%
Net Profit Margin 10.3%
Net Profit Margin - 3 Yr. Avg. 9.4%
Effective Tax Rate 35.9%
Eff/ Tax Rate - 3 Yr. Avg. 34.6%
Payout Ratio 61.3%

ED stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the ED stock intrinsic value calculation we used $12075 million for the last fiscal year's total revenue generated by Consolidated Edison. The default revenue input number comes from 2016 income statement of Consolidated Edison. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our ED stock valuation model: a) initial revenue growth rate of 2.3% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 8%, whose default value for ED is calculated based on our internal credit rating of Consolidated Edison, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Consolidated Edison.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of ED stock the variable cost ratio is equal to 80.7%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $0 million in the base year in the intrinsic value calculation for ED stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 4.4% for Consolidated Edison.

Corporate tax rate of 27% is the nominal tax rate for Consolidated Edison. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the ED stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for ED are equal to 23%.

Life of production assets of 10 years is the average useful life of capital assets used in Consolidated Edison operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for ED is equal to -1%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $14298 million for Consolidated Edison - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 307.299 million for Consolidated Edison is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Consolidated Edison at the current share price and the inputted number of shares is $25.6 billion.

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COMPANY NEWS

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▶ Con Edison Declares Common Stock Dividend   [Jul-20-17 04:16PM  GlobeNewswire]
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▶ Consolidated Edison: Cramer's Top Takeaways   [Jun-01-17 06:29AM  TheStreet.com]
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▶ Con Edison Declares Common Stock Dividend   [Apr-20-17 04:48PM  Marketwired]
▶ Con Edison to Report 1st Quarter 2017 Earnings on May 4   [Apr-18-17 03:26PM  Marketwired]
▶ Traders Are Most Bearish on These Utility Stocks   [Apr-11-17 09:07AM  Market Realist]
▶ Con Edison's Podcast Explores Power Industry Trends   [Apr-04-17 09:42AM  Marketwired]
▶ Analysts Are the Most Bearish on These Utility Stocks   [Apr-03-17 05:35PM  Market Realist]
▶ Why These Utility Stocks Should Concern You   [Mar-29-17 02:35PM  Market Realist]
▶ New York City Passes Century Mark for Solar Generation   [Mar-21-17 12:15PM  Marketwired]
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▶ [$$] Blackstone Units Have 40% Upside, and 8% Yield   [Mar-11-17 12:36AM  at Barrons.com]
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▶ Con Edison Reports 2016 Earnings   [05:55PM  Marketwired]
▶ This 50% Dividend Grower Is Hiding In Plain Sight   [Feb-10-17 09:33AM  at Forbes]
Stock chart of ED Financial statements of ED
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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