Stock Analysis & Valuation Consolidated Edison, Inc. (0I35.L)

• Previous Close: £106.41
• Sector Valuation Confidence Level: Moderate

Valuation method	Value, £	Upside, %
Artificial intelligence (AI)	59.20	-44
Intrinsic value (DCF)	41.73	-61
Graham-Dodd Method	31.20	-71
Graham Formula	48.70	-54

Strategic Investment Analysis

Company Overview

Consolidated Edison, Inc. (Con Edison) is a leading energy delivery company serving approximately 3.5 million electric, 1.1 million gas, and 1,555 steam customers across New York City and Westchester County. Founded in 1823 and headquartered in New York, the company operates one of the largest utility networks in the U.S., including extensive transmission and distribution infrastructure. Con Edison plays a critical role in the Northeast's energy sector, providing reliable electricity, natural gas, and steam services to residential, commercial, industrial, and government customers. The company is also expanding into renewable energy and infrastructure projects, aligning with the broader industry shift toward sustainability. As a regulated utility, Con Edison benefits from stable cash flows and a predictable revenue model, making it a cornerstone investment in the utilities sector. Its strategic investments in grid modernization and clean energy position it for long-term growth in an evolving energy landscape.

Investment Summary

Consolidated Edison presents a stable investment opportunity with its regulated utility operations providing consistent revenue and cash flow. The company's low beta (0.276) indicates lower volatility compared to the broader market, appealing to risk-averse investors. With a market cap of $37.1 billion and a solid dividend yield (3.36 per share), Con Edison is attractive for income-focused portfolios. However, high total debt ($27.8 billion) and capital-intensive operations pose financial risks. The company's focus on renewable energy and infrastructure modernization offers growth potential, but regulatory challenges and rising interest rates could impact profitability. Investors should weigh its defensive characteristics against sector-specific headwinds.

Competitive Analysis

Consolidated Edison holds a dominant position in the Northeastern U.S. utility market, benefiting from its extensive infrastructure and regulatory moat. Its competitive advantage stems from its monopoly-like status in key service areas (New York City and Westchester County), ensuring stable demand. The company's investments in grid resilience and renewable energy projects align with regulatory incentives and decarbonization trends, enhancing long-term positioning. However, Con Edison faces competition from other regional utilities and alternative energy providers. Its heavy reliance on regulated returns limits upside compared to unregulated peers, while aging infrastructure requires ongoing capital expenditures. The company's scale and operational expertise provide cost advantages, but rising debt levels and regulatory scrutiny could constrain financial flexibility. Compared to national utilities, Con Edison's geographic concentration increases exposure to local economic conditions and policy changes.

Major Competitors

• Dominion Energy, Inc. (D): Dominion Energy operates in the Mid-Atlantic and Southeastern U.S., with a diverse mix of regulated utilities and renewable assets. Its larger scale and broader geographic footprint provide diversification benefits compared to Con Edison's regional focus. However, Dominion faces higher regulatory risks due to its exposure to multiple jurisdictions. The company's aggressive renewable energy transition is a strength but requires significant capital, impacting near-term earnings.
• Duke Energy Corporation (DUK): Duke Energy is one of the largest U.S. utilities, serving 7.9 million customers across the Southeast and Midwest. Its extensive regulated operations and growing renewable portfolio offer stability and growth potential. Duke's larger customer base and diversified generation mix (including nuclear) provide economies of scale, but its reliance on coal-fired plants exposes it to transition risks. Compared to Con Edison, Duke operates in less densely populated regions, reducing infrastructure complexity.
• Southern Company (SO): Southern Company serves 9 million customers in the Southeastern U.S., with a focus on regulated utilities and clean energy investments. Its leadership in nuclear and renewable energy projects strengthens its long-term positioning. However, Southern's history of cost overruns in large-scale projects (e.g., Vogtle nuclear plant) has weighed on profitability. Unlike Con Edison, Southern operates in a region with lower energy prices, impacting revenue potential.
• Public Service Enterprise Group Incorporated (PEG): PSEG is a key competitor in the Northeast, with operations in New Jersey and neighboring states. Its strong nuclear and renewable energy portfolio aligns with decarbonization goals. PSEG's recent pivot toward transmission investments mirrors Con Edison's strategy, but its smaller customer base limits scale advantages. Regulatory challenges in New Jersey pose risks compared to Con Edison's more predictable New York market.