Consolidated Edison shares decline ahead of reporting

Ticker: ED

Author: Stock Analyst  Date: 2021/02/17

Consolidated Edison, the power grid company serving the largest metropolitan area in the United States, will release its 4Q2020 financial results on Thursday, February 18. On January 21, ED announced a $ 0.04 increase in annual dividends for 2021 ($ 3.10 versus $ 3.06 in 2020), announcing a quarterly payment of $ 0.78 per share.

Thus, the history of increasing payments to shareholders will reach 47 consecutive years in 2021. It is worth noting, however, that Wall Street analysts were expecting a larger dividend ($ 3.17 per share), and news of the dividend aristocrat being paid below consensus led to market backlash.

Added to this was the reduction of the management's forecast for the annual EPS 2020 to the lower end of the range of $ 4.15 - 4.30. In this case, the annual EPS will decrease by 5.03% y / y, the main reason for which is the impact of the Covid-19 pandemic (an increase in the reserve for doubtful debts, a decrease in demand, a package of measures to waive penalties for violation of payment deadlines, etc.) ).

Thus, despite the high NTM dividend yield of 4.36%, the company's shares have already faced pressure in the stock market. The current recommendation of Finam Group for ED shares as of 12/01/2021 is “hold”, the upside is 19.5% excluding dividends.