Intrinsic value of Edison International - EIX

Previous Close

$79.60

  Intrinsic Value

$89.23

stock screener

  Rating & Target

hold

+12%

  Value-price divergence*

+58%

Previous close

$79.60

 
Intrinsic value

$89.23

 
Up/down potential

+12%

 
Rating

hold

 
Value-price divergence*

+58%

*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 26.1

 

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
  6.80
  6.62
  6.46
  6.31
  6.18
  6.06
  5.96
  5.86
  5.77
  5.70
  5.63
  5.56
  5.51
  5.46
  5.41
  5.37
  5.33
  5.30
  5.27
  5.24
  5.22
  5.20
  5.18
  5.16
  5.14
  5.13
  5.12
  5.10
  5.09
  5.08
Revenue, $m
  11,869
  12,676
  13,515
  14,388
  15,296
  16,242
  17,226
  18,253
  19,322
  20,438
  21,603
  22,818
  24,088
  25,415
  26,802
  28,252
  29,770
  31,358
  33,020
  34,760
  36,582
  38,491
  40,492
  42,588
  44,786
  47,089
  49,504
  52,037
  54,694
  57,480
  60,403
Variable operating expenses, $m
 
  9,596
  10,231
  10,892
  11,579
  12,295
  13,040
  13,817
  14,627
  15,472
  16,353
  17,273
  18,235
  19,239
  20,289
  21,387
  22,536
  23,738
  24,996
  26,313
  27,693
  29,138
  30,652
  32,239
  33,903
  35,646
  37,475
  39,392
  41,403
  43,512
  45,725
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
  10,434
  11,090
  11,773
  12,482
  13,220
  13,989
  14,789
  15,624
  16,494
  17,400
  18,346
  19,335
  20,367
  21,445
  22,572
  23,750
  24,983
  26,272
  27,621
  29,033
  30,512
  32,060
  33,682
  35,383
  37,163
  39,029
  40,985
  43,036
  45,186
  47,441
Operating income, $m
  2,092
  2,242
  2,425
  2,615
  2,814
  3,021
  3,237
  3,463
  3,699
  3,945
  4,202
  4,472
  4,753
  5,048
  5,357
  5,681
  6,020
  6,375
  6,748
  7,139
  7,549
  7,980
  8,431
  8,905
  9,403
  9,926
  10,475
  11,052
  11,657
  12,294
  12,962
EBITDA, $m
  4,190
  2,277
  2,463
  2,656
  2,857
  3,067
  3,286
  3,514
  3,753
  4,002
  4,263
  4,535
  4,821
  5,119
  5,432
  5,760
  6,103
  6,463
  6,840
  7,236
  7,652
  8,087
  8,545
  9,025
  9,529
  10,058
  10,614
  11,197
  11,811
  12,455
  13,131
Interest expense (income), $m
  504
  507
  608
  715
  827
  943
  1,064
  1,190
  1,321
  1,457
  1,600
  1,749
  1,904
  2,066
  2,236
  2,413
  2,598
  2,792
  2,995
  3,208
  3,430
  3,663
  3,907
  4,162
  4,430
  4,711
  5,005
  5,314
  5,637
  5,977
  6,333
Earnings before tax, $m
  1,590
  1,735
  1,817
  1,900
  1,987
  2,078
  2,174
  2,273
  2,378
  2,487
  2,602
  2,723
  2,849
  2,982
  3,121
  3,268
  3,421
  3,583
  3,753
  3,931
  4,119
  4,317
  4,525
  4,743
  4,973
  5,215
  5,470
  5,738
  6,020
  6,317
  6,629
Tax expense, $m
  177
  468
  490
  513
  537
  561
  587
  614
  642
  672
  703
  735
  769
  805
  843
  882
  924
  967
  1,013
  1,061
  1,112
  1,166
  1,222
  1,281
  1,343
  1,408
  1,477
  1,549
  1,625
  1,706
  1,790
Net income, $m
  1,434
  1,266
  1,326
  1,387
  1,451
  1,517
  1,587
  1,660
  1,736
  1,816
  1,900
  1,988
  2,080
  2,177
  2,278
  2,385
  2,498
  2,616
  2,740
  2,870
  3,007
  3,151
  3,303
  3,463
  3,630
  3,807
  3,993
  4,189
  4,395
  4,611
  4,839

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
  54,638
  58,255
  62,018
  65,932
  70,007
  74,252
  78,675
  83,286
  88,096
  93,115
  98,355
  103,828
  109,547
  115,526
  121,778
  128,318
  135,162
  142,326
  149,827
  157,682
  165,911
  174,534
  183,570
  193,041
  202,970
  213,381
  224,298
  235,748
  247,758
  260,356
Adjusted assets (=assets-cash), $m
  51,223
  54,638
  58,255
  62,018
  65,932
  70,007
  74,252
  78,675
  83,286
  88,096
  93,115
  98,355
  103,828
  109,547
  115,526
  121,778
  128,318
  135,162
  142,326
  149,827
  157,682
  165,911
  174,534
  183,570
  193,041
  202,970
  213,381
  224,298
  235,748
  247,758
  260,356
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
  177
  189
  201
  214
  227
  241
  256
  271
  286
  302
  319
  337
  356
  375
  396
  417
  439
  462
  487
  512
  539
  567
  596
  627
  659
  693
  729
  766
  805
  846
Working capital, $m
  -3,789
  -1,711
  -1,825
  -1,942
  -2,065
  -2,193
  -2,326
  -2,464
  -2,609
  -2,759
  -2,916
  -3,080
  -3,252
  -3,431
  -3,618
  -3,814
  -4,019
  -4,233
  -4,458
  -4,693
  -4,939
  -5,196
  -5,466
  -5,749
  -6,046
  -6,357
  -6,683
  -7,025
  -7,384
  -7,760
  -8,154
Total debt, $m
  12,463
  14,835
  17,450
  20,170
  23,000
  25,946
  29,015
  32,213
  35,547
  39,024
  42,653
  46,441
  50,399
  54,534
  58,856
  63,376
  68,105
  73,053
  78,233
  83,656
  89,335
  95,285
  101,519
  108,052
  114,900
  122,079
  129,606
  137,499
  145,777
  154,460
  163,568
Total liabilities, $m
  37,132
  39,504
  42,119
  44,839
  47,669
  50,615
  53,684
  56,882
  60,216
  63,693
  67,322
  71,110
  75,068
  79,203
  83,525
  88,045
  92,774
  97,722
  102,902
  108,325
  114,004
  119,954
  126,188
  132,721
  139,569
  146,748
  154,275
  162,168
  170,446
  179,129
  188,237
Total equity, $m
  14,187
  15,135
  16,137
  17,179
  18,263
  19,392
  20,568
  21,793
  23,070
  24,402
  25,793
  27,244
  28,760
  30,345
  32,001
  33,732
  35,544
  37,440
  39,424
  41,502
  43,678
  45,957
  48,346
  50,849
  53,472
  56,223
  59,107
  62,131
  65,302
  68,629
  72,119
Total liabilities and equity, $m
  51,319
  54,639
  58,256
  62,018
  65,932
  70,007
  74,252
  78,675
  83,286
  88,095
  93,115
  98,354
  103,828
  109,548
  115,526
  121,777
  128,318
  135,162
  142,326
  149,827
  157,682
  165,911
  174,534
  183,570
  193,041
  202,971
  213,382
  224,299
  235,748
  247,758
  260,356
Debt-to-equity ratio
  0.878
  0.980
  1.080
  1.170
  1.260
  1.340
  1.410
  1.480
  1.540
  1.600
  1.650
  1.700
  1.750
  1.800
  1.840
  1.880
  1.920
  1.950
  1.980
  2.020
  2.050
  2.070
  2.100
  2.120
  2.150
  2.170
  2.190
  2.210
  2.230
  2.250
  2.270
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
  1,266
  1,326
  1,387
  1,451
  1,517
  1,587
  1,660
  1,736
  1,816
  1,900
  1,988
  2,080
  2,177
  2,278
  2,385
  2,498
  2,616
  2,740
  2,870
  3,007
  3,151
  3,303
  3,463
  3,630
  3,807
  3,993
  4,189
  4,395
  4,611
  4,839
Depreciation, amort., depletion, $m
  2,098
  35
  38
  40
  43
  45
  48
  51
  54
  57
  60
  64
  67
  71
  75
  79
  83
  88
  92
  97
  102
  108
  113
  119
  125
  132
  139
  146
  153
  161
  169
Funds from operations, $m
  3,253
  1,302
  1,364
  1,427
  1,493
  1,563
  1,635
  1,711
  1,790
  1,873
  1,960
  2,052
  2,147
  2,248
  2,354
  2,464
  2,581
  2,703
  2,832
  2,967
  3,109
  3,259
  3,416
  3,582
  3,756
  3,939
  4,132
  4,334
  4,548
  4,772
  5,008
Change in working capital, $m
  -3
  -109
  -113
  -118
  -123
  -128
  -133
  -139
  -144
  -151
  -157
  -164
  -171
  -179
  -187
  -196
  -205
  -214
  -224
  -235
  -246
  -258
  -270
  -283
  -297
  -311
  -326
  -342
  -359
  -376
  -395
Cash from operations, $m
  3,256
  1,411
  1,477
  1,545
  1,616
  1,690
  1,768
  1,849
  1,934
  2,024
  2,117
  2,216
  2,319
  2,427
  2,541
  2,660
  2,786
  2,918
  3,056
  3,202
  3,356
  3,517
  3,686
  3,865
  4,052
  4,250
  4,458
  4,676
  4,906
  5,148
  5,403
Maintenance CAPEX, $m
  0
  -33
  -35
  -38
  -40
  -43
  -45
  -48
  -51
  -54
  -57
  -60
  -64
  -67
  -71
  -75
  -79
  -83
  -88
  -92
  -97
  -102
  -108
  -113
  -119
  -125
  -132
  -139
  -146
  -153
  -161
New CAPEX, $m
  -3,734
  -10
  -12
  -12
  -13
  -13
  -14
  -14
  -15
  -16
  -16
  -17
  -18
  -19
  -19
  -20
  -21
  -22
  -23
  -24
  -26
  -27
  -28
  -29
  -31
  -32
  -34
  -35
  -37
  -39
  -41
Cash from investing activities, $m
  -3,416
  -43
  -47
  -50
  -53
  -56
  -59
  -62
  -66
  -70
  -73
  -77
  -82
  -86
  -90
  -95
  -100
  -105
  -111
  -116
  -123
  -129
  -136
  -142
  -150
  -157
  -166
  -174
  -183
  -192
  -202
Free cash flow, $m
  -160
  1,367
  1,430
  1,495
  1,563
  1,634
  1,709
  1,787
  1,868
  1,954
  2,044
  2,138
  2,237
  2,341
  2,450
  2,565
  2,685
  2,812
  2,945
  3,085
  3,233
  3,388
  3,551
  3,722
  3,902
  4,092
  4,292
  4,502
  4,723
  4,956
  5,201
Issuance/(repayment) of debt, $m
  788
  2,468
  2,615
  2,720
  2,830
  2,946
  3,069
  3,198
  3,334
  3,477
  3,629
  3,789
  3,957
  4,135
  4,323
  4,520
  4,729
  4,948
  5,179
  5,423
  5,680
  5,950
  6,234
  6,533
  6,848
  7,179
  7,527
  7,893
  8,278
  8,683
  9,108
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
  2,468
  2,615
  2,720
  2,830
  2,946
  3,069
  3,198
  3,334
  3,477
  3,629
  3,789
  3,957
  4,135
  4,323
  4,520
  4,729
  4,948
  5,179
  5,423
  5,680
  5,950
  6,234
  6,533
  6,848
  7,179
  7,527
  7,893
  8,278
  8,683
  9,108
Total cash flow (excl. dividends), $m
  561
  3,834
  4,045
  4,215
  4,393
  4,581
  4,777
  4,984
  5,202
  5,431
  5,673
  5,927
  6,194
  6,476
  6,773
  7,085
  7,414
  7,760
  8,125
  8,508
  8,912
  9,337
  9,785
  10,255
  10,750
  11,271
  11,819
  12,395
  13,002
  13,639
  14,309
Retained Cash Flow (-), $m
  -799
  -948
  -1,002
  -1,042
  -1,084
  -1,129
  -1,176
  -1,225
  -1,277
  -1,332
  -1,390
  -1,452
  -1,516
  -1,584
  -1,656
  -1,732
  -1,812
  -1,896
  -1,984
  -2,078
  -2,176
  -2,279
  -2,388
  -2,503
  -2,624
  -2,750
  -2,884
  -3,024
  -3,172
  -3,327
  -3,490
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
 
  2,887
  3,043
  3,173
  3,309
  3,452
  3,602
  3,759
  3,925
  4,099
  4,282
  4,475
  4,678
  4,892
  5,117
  5,353
  5,602
  5,864
  6,140
  6,431
  6,736
  7,058
  7,396
  7,752
  8,127
  8,521
  8,935
  9,371
  9,830
  10,312
  10,820
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
 
  2,693
  2,630
  2,523
  2,402
  2,269
  2,125
  1,973
  1,814
  1,650
  1,485
  1,321
  1,161
  1,007
  861
  725
  601
  490
  393
  309
  238
  180
  133
  96
  67
  46
  31
  20
  13
  8
  4
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 is the holding company of Southern California Edison Company (SCE). As of December 31, 2016, SCE, a public utility, was primarily engaged in the business of supplying and delivering electricity to an approximately 50,000 square mile area of southern California. The Company is also the parent company of Edison Energy Group, Inc. (Edison Energy Group), a holding company for subsidiaries engaged in pursuing competitive business opportunities across energy services and distributed solar to commercial and industrial customers. SCE's projects include West of Devers, Mesa Substation, Alberhill System, Riverside Transmission Reliability, Eldorado-Lugo-Mohave Upgrade, Tehachapi and Coolwater-Lugo. As of December 31, 2016, the West of Devers Project consisted of upgrading and reconfiguring approximately 48 miles of existing 220 kilovolt (kV) transmission lines between the Devers, El Casco, Vista and San Bernardino substations.

FINANCIAL RATIOS  of  Edison International (EIX)

Valuation Ratios
P/E Ratio 18.1
Price to Sales 2.2
Price to Book 1.8
Price to Tangible Book
Price to Cash Flow 8
Price to Free Cash Flow -54.3
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 6.8% 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 328.05 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 $26.1 billion.

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COMPANY NEWS

▶ Inside Edison Internationals Handsome Dividend Growth   [Oct-19-17 09:10AM  Market Realist]
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▶ How Analysts View PG&Es Recent Stock Changes   [07:38AM  Market Realist]
▶ Sempra Energy Aims for Above-Average Dividend Growth   [Sep-15-17 12:06PM  Market Realist]
▶ [$$] Appeals Court Orders $13.1 Million in Damages in Landmark 401(k) Case   [Sep-08-17 06:32PM  The Wall Street Journal]
▶ Institutional Investment in California Utilities   [Aug-25-17 10:37AM  Market Realist]
▶ Why SRE, PCG, and EIX Yield Lower   [09:07AM  Market Realist]
▶ What SRE, PCG, and EIXs Chart Indicators Mean   [01:06PM  Market Realist]
▶ Sempra Energys Current Valuation and Dividend Profile   [Aug-22-17 01:35PM  Market Realist]
▶ L.A. to launch cybersecurity threat partnership with businesses   [Aug-15-17 03:00PM  American City Business Journals]
▶ Edison International meets 2Q profit forecasts   [Jul-27-17 09:24PM  Associated Press]
▶ Green Energy Is Threatening to Cripple Many Utilities   [Jul-09-17 03:20PM  TheStreet.com]
▶ Southern California Edison Declares Dividends   [Jun-22-17 06:00PM  Business Wire]
▶ ETFs with exposure to Edison International : May 4, 2017   [May-04-17 03:55PM  Capital Cube]
▶ Edison International beats 1Q profit forecasts   [May-01-17 04:14PM  Associated Press]
▶ Edison International Stock Trades Ex-Dividend Wednesday   [Mar-28-17 08:56AM  Investopedia]
▶ Scana: Why Its Implied Volatility Rose   [Mar-20-17 01:01PM  Market Realist]
▶ These Big Utilities Are Paying Higher Dividends Now   [Mar-14-17 06:05PM  Market Realist]
▶ Top Research Reports for March 10, 2017   [Mar-10-17 01:34PM  Zacks]
▶ [$$] 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]
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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