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Reasons to Add Edison International (EIX) to Your Portfolio

Zacks Equity Research

Edison International EIX is well-equipped with a strong portfolio of utility assets and well-managed merchant energy operations, indicative of a lower risk profile than its industry peers. This Zacks Rank #2 (Buy) utility remains a promising bet, given its focus on transmission and distribution of infrastructural development programs along with expansion of its operations.

Mixed Growth Projections: The Zacks Consensus Estimate for 2020 earnings per share is pegged at $4.62 on $13 billion revenues. While the top line implies a 3.12% increase, the bottom line suggests a 2.63% dip from the year-ago reported figures.

Edison International has expected long-term earnings (three to five years) per share growth rate of 5.30%.

Impressive Price Performance: Shares of Edison International have surged 39.5% in the past 12 months, outperforming the industry’s growth of 22.4%.



Positive Earnings Estimate Revisions & Surprise History: The Zacks Consensus Estimate for 2020 earnings has been revised 1.8% upward over the past 60 days.

Edison International’s trailing four-quarter positive earnings surprise is 0.09% on average.

Consistent Dividend Payouts: A stable financial position enables Edison International to maximize shareholder value through regular dividends. On Dec 12, 2019, the company declared a quarterly common stock dividend of 64 cents per share, payable Jan 31, 2020 to its shareholders. This strategic action hikes the annual dividend by 10 cents per share.

The current dividend yield of the company is 3.31% with an annual dividend of $2.55 per share, reflecting 4.08% increase from its previous year’s annual dividend rate of $2.45.

Key Drivers in Place

The Southern California Edison (SCE), a subsidiary of Edison International, currently intends to invest $8.90-$9.10 billion between 2019 and 2020 including an approximate allocation of $4.48 billion and $4.42-4.62 billion for 2019 and 2020, respectively. The investment also includes grid modernization spending of $0.65 billion during the two-year period. Of the total expenses, $8.05 billion is allotted for traditional investment focusing on expanding its distribution channels and transmission facilities, as well as generating more electricity. SCE also emphasizes on mitigating its risks.

Other Stocks to Consider

Other top-ranked stocks in the utility sector include Entergy Corporation ETR, NorthWestern Corporation NWE, and Atmos Energy Corporation ATO, all holding a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Entergy Corporation, NorthWestern Corporation, and Atmos Energy Corporation delivered a respective four-quarter positive earnings surprise of 4.79%, 10.49% and 3.18%, on average.

Long-term earnings per share growth for Entergy Corporation, NorthWestern Corporation and Atmos Energy Corporation is projected at 7%, 3.53% and 7.15% each.

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Entergy Corporation (ETR) : Free Stock Analysis Report
 
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