Reasons to Add Consolidated Edison (ED) to Your Portfolio Now
Consolidated Edison Inc.’s ED solid investment plan over the next 10 years to maintain and upgrade the infrastructure will boost its performance. The company will further benefit from its stable financial position.
Let’s explore the factors that make this Zacks Rank #2 (Buy) company a strong investment pick at the moment.
Growth Projections & Surprise History
Consolidated Edison’s long-term (three to five-year) earnings growth rate is 2%.
The Zacks Consensus Estimate for ED’s 2023 earnings per share (EPS) is pegged at $4.96, indicating a year-over-year improvement of 9%.
The consensus estimate for 2024 EPS is pinned at $5.28, implying a year-over-year improvement of 6.5%.
The stock delivered an average earnings surprise of 6.13% for the previous four quarters.
Return on Equity
Return on Equity (ROE) indicates how efficiently a company has been utilizing its funds to generate higher returns. Currently, Consolidated Edison’s ROE is 8.16%, which is higher than the industry’s average of 7%. This indicates that the company has been utilizing its funds more effectively than its peers in the electric power utility industry.
Debt Position
At the end of third-quarter 2023, ED’s total debt to capital was 50.26%, much better than the industry’s average of 59.13%.
The time-to-interest earned ratio at the end of the third quarter of 2023 was 3.87. The ratio, being greater than one, reflects Consolidated Edison’s ability to meet future interest obligations without difficulties.
Dividend History
The company has been consistently paying dividends to its shareholders. Its board of directors raised its dividend rate for 49 consecutive years with a CAGR of 5.72%. Currently, its quarterly dividend is 81 cents per share, resulting in an annualized dividend of $3.24 per share.
ED’s current dividend yield is 3.6%, better than the Zacks S&P 500 Composite’s 1.42%.
Systematic Investments
Consolidated Edison aims to invest $4.73 billion in 2023 for infrastructure development and maintenance of its electric, gas and steam delivery systems' reliability. ED aims to invest $14.6 billion in the 2023-2025 period and $72 billion in the next 10 years.
Price Performance
In the past three months, shares of ED have risen 2% against the broader industry’s 4.4% decline.
Image Source: Zacks Investment Research
Other Stocks to Consider
A few other top-ranked stocks from the same industry are PPL Corp. PPL, NiSource Inc. NI and OGE Energy OGE, each carrying a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
PPL’s long-term earnings growth rate is 7.4%. The Zacks Consensus Estimate for PPL’s 2023 EPS indicates an increase of 12.1% from the previous year’s reported number.
NiSource’s long-term earnings growth rate is 7.2%. The Zacks Consensus Estimate for NI’s 2023 EPS implies an improvement of 8.8% from that recorded in 2022.
OGE Energy’s long-term earnings growth rate is 3.7%. The company delivered an average earnings surprise of 8.26% in the last four quarters.
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