Edison International Earnings: Management’s Updated Growth Plan in Line With Our Forecast

We are reaffirming our $74 fair value estimate for Edison International EIX after reviewing regulatory updates and earnings during the second quarter. We are reaffirming our narrow moat rating.

Management reported $1.01 per share of core earnings during the second quarter of 2023, up from $0.94 last year. First-half earnings are on track to meet our full-year forecast, in line with management’s $4.55-$4.85 EPS guidance.

Management extended their 5%-7% annual earnings growth outlook through 2028, in line with our forecast. Edison’s plan to invest as much as $7 billion annually on average during the next five years and California’s constructive utility regulation support that growth. Our 2025 EPS estimate is at the high end of management’s $5.50-$5.90 guidance range.

Edison’s stock is up 11% this year making it the best-performing U.S.-regulated utility in our coverage and one of the few with a positive return. It still trades at a slight discount to our fair value estimate with a dividend yield that is over 4%. Although we think valuation upside is limited, investors should still benefit from Edison’s yield and earnings growth.

The bulk of Edison’s capital investment plan is subject to a constructive outcome in the 2025-28 general rate case it filed in May. We expect regulators will support the bulk of Edison’s investment plan and proposed customer rate increases given the carbon-reduction mandates in California state law. Edison’s investments would expand and strengthen the electric grid to support building and vehicle electrification. We expect a ruling in 2025.

Edison has resolved nearly all of its estimated $8.8 billion of 2017-18 disaster liabilities and plans to request recovery for substantially all of those costs through insurance or customer rates subject to regulatory approval. Any cost recovery would help reduce interest costs, which have been a drag on near-term earnings growth.