Consolidated Edison: A Defensive Allocation, But Return Expectations Remain Moderate

Prakhar Agarwal, CFA43 FollowersFollow5ShareSavePlay(13min)CommentsSummaryConsolidated Edison, Inc. trades at 1.64x book value and 19.48x earnings, reflecting fair valuations without signs of mispricing.ED's per share book value grew identically with price returns at around ~4% CAGR over ten years, with a total return CAGR of ~7.5%.Forward expectations suggest ED might return identical to past performances at around ~6.5%-7.5%, unless we see a decline in interest rates leading to multiple expansion.ED therefore is rated as a hold at present. The market price at current is fairly valued in terms of return prospects and the predictability offered by the business.

Con Edison Power Plant in Manhattan, NYC olli0815/iStock Editorial via Getty Images Consolidated Edison, Inc. (ED) currently trades at a price-to-book of ~1.64x with a return on common equity of ~8.5%. ED is a utility player, where theThis article was written byPrakhar Agarwal, CFA43 FollowersFollowI have been managing investments for over eight years in capital markets. By qualification I am a CFA Charter holder. I primarily look for discrepancies between the price and value of a security. With a focus on first-principal mindset, I try breaking down ideas into their core- most tangible parts, affecting the theses while deliberately avoiding the non-significant matter into crowding the analysis. If you like my ideas or frameworks, reach out via email/message for more granular and concentrated- portfolio level specific investment researches and ideas. I am at prakhar@shrihittruealphacapital.com.Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Readers are advised to fact-check thoroughly before making any investment related decisions; this reflects the personal views of the author and should not be pursued as formal financial or investment advice in any manner. While every effort has been made to ensure accuracy, errors may exist in the data and financial projections presented. The author is not responsible for any financial gains or losses incurred from investments made based on this content. For any additional information regarding the company or any clarification, feel free to comment. Happy to discuss anything further with regard to the presented investment thesis.Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.