Edison International (EIX) is a large power utility company with a market cap of over $32 billion. It is the parent company of Southern California Edison (SCE) and Edison. SCE is the main utility company that serves millions of customers in the region, while Edison Energy offers advisory services to commercial, industrial, and institutional customers globally.
Edison International’s business has gone through challenges over time. Being a Californian company, it has had to deal with forest fires that cost the state billions of dollars. At the same time, it needs substantial sums of money to fund the transition to clean energy, while its profitability growth has been fairly weak.
Edison International’s net income stood at $1.28 billion in 2019 and dropped to $612 million in 2022 before jumping back to $1.19 billion in the last financial year.
The company has benefited from the regular utility price increases and the substantial demand from households, industries, data centers, and electric vehicles.
Edison International stock was trading at $83.58 on Tuesday after rising by almost 50% from its lowest point last year. Its HypeIndex figure has risen to 297%.
Positive hype
Edison International’s hype has jumped after the Donald Trump won the election and announced that Lee Zeldin will be the head of the EPA. Analysts expect that the new administration will reduce some of the regulations in the utility industry.
The company will also benefit from low interest rates in the coming months, which are huge costs for utilities that have substantial debt. Edison has over $32 billion in debt and is spending $2 billion in annual interest expenses.
The stock has formed a bullish flag pattern, pointing to a potential bull run in the coming months. It has also remained above the 100-day and 50-day Exponential Moving Averages.
Edison is a relatively cheap company trading at a price-to-earnings ratio of 16.9, lower than the sector median of 18.
The company is making progress in resolving legacy wildfires and more. It also expects that its business will continue doing well in the coming quarters.
Analysts expect that its revenue will be $3.84 billion in the current quarter followed by over $17.58 billion this year.
The average stock estimate is $90.54, up from the current $83.58.
Negative hype
Edison International is facing substantial claims related to wildfires. As a result, it has started to use insurance to avoid such large penalties in the future.
The company is facing substantial expenses to upgrade the power infrastructure in the coming years.
Edison has continued to dilute its shareholders as the number of outstanding shares jumped from 383 million in 2023 to 387 million today.
Edison International stock analysis
The daily chart shows that the Edison International stock price has bounced back in the past few days after it published its financial results.
It bounced back after retesting the lower side of the descending channel. The stock has also formed a bullish flag pattern. Additionally, it has remained above the 50-day and 100-day moving averages, while the Relative Strength Index (RSI) has pointed upwards.
Therefore, the stock will likely continue doing well as investors target the year-to-date high of $88, its highest point this year.
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