Intrinsic value of Edison International - EIX

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$80.60

  Intrinsic Value

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  Rating & Target

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  Value-price divergence*

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Previous close

$80.60

 
Intrinsic value

$322.57

 
Up/down potential

+300%

 
Rating

str. buy

 
Value-price divergence* premium content

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

We calculate the intrinsic value of EIX 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 26.3

 

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, %
  2.99
  23.20
  21.38
  19.74
  18.27
  16.94
  15.75
  14.67
  13.71
  12.83
  12.05
  11.35
  10.71
  10.14
  9.63
  9.16
  8.75
  8.37
  8.04
  7.73
  7.46
  7.21
  6.99
  6.79
  6.61
  6.45
  6.31
  6.18
  6.06
  5.95
  5.86
Revenue, $m
  11,869
  14,623
  17,749
  21,253
  25,135
  29,394
  34,022
  39,014
  44,361
  50,054
  56,086
  62,450
  69,139
  76,150
  83,480
  91,130
  99,101
  107,399
  116,028
  124,999
  134,323
  144,011
  154,079
  164,545
  175,426
  186,744
  198,521
  210,782
  223,552
  236,859
  250,732
Variable operating expenses, $m
 
  11,069
  13,436
  16,088
  19,027
  22,251
  25,755
  29,534
  33,581
  37,891
  42,457
  47,275
  52,338
  57,645
  63,195
  68,985
  75,020
  81,301
  87,833
  94,625
  101,682
  109,016
  116,638
  124,560
  132,798
  141,365
  150,281
  159,562
  169,229
  179,302
  189,804
Fixed operating expenses, $m
 
  838
  859
  881
  903
  925
  949
  972
  997
  1,022
  1,047
  1,073
  1,100
  1,128
  1,156
  1,185
  1,214
  1,245
  1,276
  1,308
  1,340
  1,374
  1,408
  1,443
  1,480
  1,517
  1,554
  1,593
  1,633
  1,674
  1,716
Total operating expenses, $m
  9,777
  11,907
  14,295
  16,969
  19,930
  23,176
  26,704
  30,506
  34,578
  38,913
  43,504
  48,348
  53,438
  58,773
  64,351
  70,170
  76,234
  82,546
  89,109
  95,933
  103,022
  110,390
  118,046
  126,003
  134,278
  142,882
  151,835
  161,155
  170,862
  180,976
  191,520
Operating income, $m
  2,092
  2,715
  3,454
  4,284
  5,205
  6,217
  7,319
  8,508
  9,783
  11,142
  12,582
  14,102
  15,701
  17,377
  19,130
  20,960
  22,867
  24,853
  26,919
  29,067
  31,300
  33,621
  36,033
  38,541
  41,149
  43,862
  46,686
  49,627
  52,690
  55,883
  59,212
EBITDA, $m
  4,190
  2,756
  3,503
  4,343
  5,275
  6,299
  7,414
  8,617
  9,907
  11,282
  12,739
  14,277
  15,894
  17,590
  19,364
  21,215
  23,145
  25,154
  27,244
  29,417
  31,676
  34,024
  36,464
  39,002
  41,640
  44,385
  47,242
  50,217
  53,316
  56,546
  59,914
Interest expense (income), $m
  504
  507
  857
  1,256
  1,704
  2,200
  2,744
  3,336
  3,973
  4,657
  5,384
  6,155
  6,968
  7,823
  8,718
  9,655
  10,632
  11,651
  12,711
  13,814
  14,960
  16,151
  17,389
  18,676
  20,013
  21,403
  22,849
  24,354
  25,920
  27,552
  29,252
Earnings before tax, $m
  1,590
  2,208
  2,597
  3,027
  3,501
  4,017
  4,575
  5,172
  5,810
  6,485
  7,198
  7,947
  8,733
  9,554
  10,412
  11,305
  12,235
  13,202
  14,208
  15,253
  16,340
  17,470
  18,644
  19,865
  21,136
  22,459
  23,837
  25,273
  26,769
  28,331
  29,960
Tax expense, $m
  177
  596
  701
  817
  945
  1,085
  1,235
  1,397
  1,569
  1,751
  1,943
  2,146
  2,358
  2,580
  2,811
  3,052
  3,303
  3,565
  3,836
  4,118
  4,412
  4,717
  5,034
  5,364
  5,707
  6,064
  6,436
  6,824
  7,228
  7,649
  8,089
Net income, $m
  1,434
  1,612
  1,896
  2,210
  2,556
  2,932
  3,339
  3,776
  4,241
  4,734
  5,254
  5,801
  6,375
  6,975
  7,600
  8,253
  8,931
  9,638
  10,372
  11,135
  11,928
  12,753
  13,610
  14,502
  15,430
  16,395
  17,401
  18,449
  19,542
  20,681
  21,871

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  96
  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
  51,319
  63,028
  76,504
  91,607
  108,342
  126,696
  146,647
  168,163
  191,210
  215,751
  241,751
  269,180
  298,013
  328,232
  359,829
  392,802
  427,161
  462,925
  500,122
  538,790
  578,976
  620,736
  664,135
  709,244
  756,147
  804,932
  855,696
  908,543
  963,585
  1,020,942
  1,080,741
Adjusted assets (=assets-cash), $m
  51,223
  63,028
  76,504
  91,607
  108,342
  126,696
  146,647
  168,163
  191,210
  215,751
  241,751
  269,180
  298,013
  328,232
  359,829
  392,802
  427,161
  462,925
  500,122
  538,790
  578,976
  620,736
  664,135
  709,244
  756,147
  804,932
  855,696
  908,543
  963,585
  1,020,942
  1,080,741
Revenue / Adjusted assets
  0.232
  0.232
  0.232
  0.232
  0.232
  0.232
  0.232
  0.232
  0.232
  0.232
  0.232
  0.232
  0.232
  0.232
  0.232
  0.232
  0.232
  0.232
  0.232
  0.232
  0.232
  0.232
  0.232
  0.232
  0.232
  0.232
  0.232
  0.232
  0.232
  0.232
  0.232
Average production assets, $m
  167
  205
  248
  298
  352
  412
  476
  546
  621
  701
  785
  874
  968
  1,066
  1,169
  1,276
  1,387
  1,504
  1,624
  1,750
  1,881
  2,016
  2,157
  2,304
  2,456
  2,614
  2,779
  2,951
  3,130
  3,316
  3,510
Working capital, $m
  -3,789
  -1,974
  -2,396
  -2,869
  -3,393
  -3,968
  -4,593
  -5,267
  -5,989
  -6,757
  -7,572
  -8,431
  -9,334
  -10,280
  -11,270
  -12,303
  -13,379
  -14,499
  -15,664
  -16,875
  -18,134
  -19,441
  -20,801
  -22,214
  -23,683
  -25,210
  -26,800
  -28,456
  -30,179
  -31,976
  -33,849
Total debt, $m
  12,463
  20,901
  30,643
  41,563
  53,662
  66,932
  81,357
  96,913
  113,576
  131,319
  150,117
  169,948
  190,795
  212,643
  235,487
  259,327
  284,169
  310,026
  336,920
  364,877
  393,931
  424,123
  455,500
  488,115
  522,025
  557,297
  593,999
  632,207
  672,003
  713,472
  756,707
Total liabilities, $m
  37,132
  45,570
  55,312
  66,232
  78,331
  91,601
  106,026
  121,582
  138,245
  155,988
  174,786
  194,617
  215,464
  237,312
  260,156
  283,996
  308,838
  334,695
  361,589
  389,546
  418,600
  448,792
  480,169
  512,784
  546,694
  581,966
  618,668
  656,876
  696,672
  738,141
  781,376
Total equity, $m
  14,187
  17,459
  21,192
  25,375
  30,011
  35,095
  40,621
  46,581
  52,965
  59,763
  66,965
  74,563
  82,550
  90,920
  99,673
  108,806
  118,324
  128,230
  138,534
  149,245
  160,376
  171,944
  183,965
  196,461
  209,453
  222,966
  237,028
  251,666
  266,913
  282,801
  299,365
Total liabilities and equity, $m
  51,319
  63,029
  76,504
  91,607
  108,342
  126,696
  146,647
  168,163
  191,210
  215,751
  241,751
  269,180
  298,014
  328,232
  359,829
  392,802
  427,162
  462,925
  500,123
  538,791
  578,976
  620,736
  664,134
  709,245
  756,147
  804,932
  855,696
  908,542
  963,585
  1,020,942
  1,080,741
Debt-to-equity ratio
  0.878
  1.200
  1.450
  1.640
  1.790
  1.910
  2.000
  2.080
  2.140
  2.200
  2.240
  2.280
  2.310
  2.340
  2.360
  2.380
  2.400
  2.420
  2.430
  2.440
  2.460
  2.470
  2.480
  2.480
  2.490
  2.500
  2.510
  2.510
  2.520
  2.520
  2.530
Adjusted equity ratio
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277
  0.277

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  1,434
  1,612
  1,896
  2,210
  2,556
  2,932
  3,339
  3,776
  4,241
  4,734
  5,254
  5,801
  6,375
  6,975
  7,600
  8,253
  8,931
  9,638
  10,372
  11,135
  11,928
  12,753
  13,610
  14,502
  15,430
  16,395
  17,401
  18,449
  19,542
  20,681
  21,871
Depreciation, amort., depletion, $m
  2,098
  41
  50
  60
  70
  82
  95
  109
  124
  140
  157
  175
  194
  213
  234
  255
  277
  301
  325
  350
  376
  403
  431
  461
  491
  523
  556
  590
  626
  663
  702
Funds from operations, $m
  3,253
  1,653
  1,945
  2,269
  2,626
  3,015
  3,435
  3,885
  4,365
  4,874
  5,411
  5,976
  6,569
  7,188
  7,834
  8,508
  9,209
  9,938
  10,697
  11,485
  12,304
  13,156
  14,042
  14,962
  15,921
  16,918
  17,957
  19,039
  20,168
  21,345
  22,573
Change in working capital, $m
  -3
  -372
  -422
  -473
  -524
  -575
  -625
  -674
  -722
  -769
  -814
  -859
  -903
  -946
  -990
  -1,033
  -1,076
  -1,120
  -1,165
  -1,211
  -1,259
  -1,308
  -1,359
  -1,413
  -1,469
  -1,528
  -1,590
  -1,655
  -1,724
  -1,796
  -1,873
Cash from operations, $m
  3,256
  2,051
  2,367
  2,742
  3,150
  3,590
  4,060
  4,559
  5,087
  5,643
  6,226
  6,835
  7,472
  8,134
  8,824
  9,540
  10,285
  11,059
  11,862
  12,696
  13,563
  14,464
  15,401
  16,375
  17,390
  18,446
  19,547
  20,694
  21,892
  23,141
  24,446
Maintenance CAPEX, $m
  0
  -33
  -41
  -50
  -60
  -70
  -82
  -95
  -109
  -124
  -140
  -157
  -175
  -194
  -213
  -234
  -255
  -277
  -301
  -325
  -350
  -376
  -403
  -431
  -461
  -491
  -523
  -556
  -590
  -626
  -663
New CAPEX, $m
  -3,734
  -38
  -44
  -49
  -54
  -60
  -65
  -70
  -75
  -80
  -84
  -89
  -94
  -98
  -103
  -107
  -112
  -116
  -121
  -126
  -131
  -136
  -141
  -147
  -152
  -158
  -165
  -172
  -179
  -186
  -194
Cash from investing activities, $m
  -3,416
  -71
  -85
  -99
  -114
  -130
  -147
  -165
  -184
  -204
  -224
  -246
  -269
  -292
  -316
  -341
  -367
  -393
  -422
  -451
  -481
  -512
  -544
  -578
  -613
  -649
  -688
  -728
  -769
  -812
  -857
Free cash flow, $m
  -160
  1,980
  2,283
  2,644
  3,036
  3,460
  3,912
  4,394
  4,903
  5,439
  6,001
  6,589
  7,203
  7,843
  8,508
  9,200
  9,918
  10,665
  11,440
  12,246
  13,082
  13,952
  14,857
  15,797
  16,777
  17,796
  18,859
  19,967
  21,123
  22,329
  23,588
Issuance/(repayment) of debt, $m
  788
  8,534
  9,743
  10,920
  12,099
  13,270
  14,424
  15,556
  16,663
  17,743
  18,798
  19,831
  20,846
  21,848
  22,844
  23,840
  24,842
  25,857
  26,894
  27,957
  29,054
  30,192
  31,377
  32,614
  33,911
  35,271
  36,702
  38,208
  39,796
  41,469
  43,235
Issuance/(repurchase) of shares, $m
  169
  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  
  721
  8,534
  9,743
  10,920
  12,099
  13,270
  14,424
  15,556
  16,663
  17,743
  18,798
  19,831
  20,846
  21,848
  22,844
  23,840
  24,842
  25,857
  26,894
  27,957
  29,054
  30,192
  31,377
  32,614
  33,911
  35,271
  36,702
  38,208
  39,796
  41,469
  43,235
Total cash flow (excl. dividends), $m
  561
  10,514
  12,025
  13,563
  15,135
  16,730
  18,337
  19,950
  21,566
  23,182
  24,799
  26,420
  28,049
  29,691
  31,352
  33,039
  34,760
  36,522
  38,334
  40,203
  42,137
  44,145
  46,234
  48,412
  50,687
  53,068
  55,561
  58,175
  60,918
  63,798
  66,823
Retained Cash Flow (-), $m
  -799
  -3,272
  -3,733
  -4,184
  -4,635
  -5,084
  -5,526
  -5,960
  -6,384
  -6,798
  -7,202
  -7,598
  -7,987
  -8,371
  -8,752
  -9,134
  -9,518
  -9,907
  -10,304
  -10,711
  -11,132
  -11,567
  -12,021
  -12,495
  -12,992
  -13,513
  -14,062
  -14,639
  -15,247
  -15,888
  -16,564
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
 
  7,242
  8,293
  9,380
  10,500
  11,646
  12,810
  13,990
  15,182
  16,384
  17,597
  18,823
  20,063
  21,320
  22,600
  23,906
  25,243
  26,616
  28,030
  29,492
  31,005
  32,577
  34,212
  35,916
  37,695
  39,554
  41,500
  43,537
  45,672
  47,910
  50,258
Discount rate, %
 
  7.20
  7.56
  7.94
  8.33
  8.75
  9.19
  9.65
  10.13
  10.64
  11.17
  11.73
  12.31
  12.93
  13.58
  14.26
  14.97
  15.72
  16.50
  17.33
  18.19
  19.10
  20.06
  21.06
  22.11
  23.22
  24.38
  25.60
  26.88
  28.22
  29.64
PV of cash for distribution, $m
 
  6,756
  7,168
  7,459
  7,623
  7,656
  7,559
  7,342
  7,015
  6,596
  6,104
  5,558
  4,979
  4,388
  3,802
  3,238
  2,709
  2,225
  1,793
  1,416
  1,095
  829
  613
  443
  312
  214
  143
  92
  58
  35
  21
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

Edison International, through its subsidiaries, engages in the generation, transmission, and distribution of electricity in the United States. The company generates electricity through hydroelectric, diesel, natural gas, nuclear, and photovoltaic sources. It supplies electricity primarily to commercial, residential, industrial, agricultural, and other customers, as well as public authorities through transmission and distribution networks. The company’s transmission facilities consist of lines ranging from 33 kV to 500 kV and substations; and distribution system comprises approximately 53,000 line miles of overhead lines, 38,000 line miles of underground lines, and approximately 800 distribution substations located in California. It serves approximately 5 million customers. Edison International was incorporated in 1987 and is based in Rosemead, California.

FINANCIAL RATIOS  of  Edison International (EIX)

Valuation Ratios
P/E Ratio 18.3
Price to Sales 2.2
Price to Book 1.9
Price to Tangible Book
Price to Cash Flow 8.1
Price to Free Cash Flow -54.9
Growth Rates
Sales Growth Rate 3%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate -11.6%
Cap. Spend. - 3 Yr. Gr. Rate 0.7%
Financial Strength
Quick Ratio 0
Current Ratio 0.2
LT Debt to Equity 71.7%
Total Debt to Equity 87.8%
Interest Coverage 4
Management Effectiveness
Return On Assets 3.7%
Ret/ On Assets - 3 Yr. Avg. 3.7%
Return On Total Capital 5.5%
Ret/ On T. Cap. - 3 Yr. Avg. 5.8%
Return On Equity 10.4%
Return On Equity - 3 Yr. Avg. 11%
Asset Turnover 0.2
Profitability Ratios
Gross Margin 0%
Gross Margin - 3 Yr. Avg. 0%
EBITDA Margin 35.3%
EBITDA Margin - 3 Yr. Avg. 34.3%
Operating Margin 17.6%
Oper. Margin - 3 Yr. Avg. 17.8%
Pre-Tax Margin 13.4%
Pre-Tax Margin - 3 Yr. Avg. 13.9%
Net Profit Margin 12.1%
Net Profit Margin - 3 Yr. Avg. 11.6%
Effective Tax Rate 11.1%
Eff/ Tax Rate - 3 Yr. Avg. 21.5%
Payout Ratio 43.7%

EIX stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the EIX stock intrinsic value calculation we used $11869 million for the last fiscal year's total revenue generated by Edison International. The default revenue input number comes from 2016 income statement of Edison International. 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 EIX stock valuation model: a) initial revenue growth rate of 23.2% 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 7.2%, whose default value for EIX is calculated based on our internal credit rating of Edison International, 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 Edison International.
    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 EIX stock the variable cost ratio is equal to 75.7%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $818 million in the base year in the intrinsic value calculation for EIX 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 4.1% for Edison International.

Corporate tax rate of 27% is the nominal tax rate for Edison International. 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 EIX 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 EIX are equal to 1.4%.

Life of production assets of 0.1 years is the average useful life of capital assets used in Edison International 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 EIX is equal to -13.5%. 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 - $14187 million for Edison International - 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 326.341 million for Edison International 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 Edison International at the current share price and the inputted number of shares is $26.3 billion.


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COMPANY NEWS

▶ Edison International Stock Trades Ex-Dividend Wednesday   [Mar-28-17 08:56AM  Investopedia]
▶ Scana: Why Its Implied Volatility Rose   [Mar-20-17 01:01PM  Market Realist]
▶ These Big Utilities Are Paying Higher Dividends Now   [Mar-14-17 06:05PM  Market Realist]
▶ Top Research Reports for March 10, 2017   [Mar-10-17 01:34PM  Zacks]
▶ [$$] How California Utilities Are Managing Excess Solar Power   [12:17AM  at The Wall Street Journal]
▶ [$$] How California Utilities Are Managing Excess Solar Power   [Mar-04-17 07:30AM  at The Wall Street Journal]
▶ Edison International Reaffirms Commitment to Gender Equity   [Dec-07-16 01:30PM  Business Wire]
▶ Southern California Edison Declares Dividends   [Oct-27-16 05:40PM  Business Wire]
Stock chart of EIX Financial statements of EIX
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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