Consolidated Edison (ED)
Servicios públicos / Electricidad, gas y vapor (Nueva York, regulada)
New York's largest regulated distributor of electricity, gas and steam: CECONY (a monopoly in New York City) + O&R (southeastern New York and northern New Jersey), ~100% of the business regulated (unlike a hybrid utility with an unregulated renewables arm) and with a capital plan that nearly doubles toward 2030 (from ~$5,000M to ~$8,600M/year) to sustain electric reliability against the capacity deficit identified by the NYISO and data center demand. At ~$107 (P/E ~19.3× TTM earnings, in line with the regulated utility group) the 5-year base return is around ~$123 (+3%/year of price, +6% with the dividend): Fairly valued — a solid, stable regulatory moat, with a growing investment plan financed in part by a material equity issuance that weighs on per-share EPS growth.
- Price
- $107.27
- Intrinsic value (5y, base)
- $123
- Total annual return (5y)
- 6.2%
- Status (nominal)
- Fairly valued
- Margin of safety
- +7%
The essentials
- Con Edison is a 100% regulated holding company: CECONY serves ~3.7 million electric customers and ~1.1 million gas customers across New York City (a territorial monopoly) and operates the largest steam distribution system in the US (~16,975 MMlb/year to ~1,490 customers); O&R serves ~0.3 million electric customers in southeastern New York and northern New Jersey.
- In January 2026 the NYSPSC approved a new electric rate plan for CECONY (2026-2028) with an authorized ROE of 9.40% (vs 9.25% under the prior plan, under which the company earned ~9.34% on average) and an average rate base growing from $32,935M to $39,174M over the three-year period (~9%/year) — the real engine of the utility's earnings, not revenue (which merely passes through the cost of purchased power, at no margin, due to revenue decoupling).
- The consolidated capital plan nearly doubles toward 2030 (from $4,996M in 2025 to $8,588M in 2030, ~$37,700M cumulative), driven by the electric capacity deficit identified by the NYISO for New York City starting in 2026 and by data center demand — financed with debt (~$16,100M planned for 2026-2030) and a material equity issuance (~$5,600M planned, in addition to the dividend reinvestment and employee stock purchase plans) that dilutes per-share EPS more than at a less capital-intensive utility.
Intrinsic value — two valuation methods
Total return at 5 years: 6.2%/year = 2.8% appreciation + 3.5% dividend. The target price ($123) is ex-dividend; the $20 in dividends collected over 5 years are added separately.
By both methods, the value today (DCF $117 · Multiples $116) exceeds the market price ($107).
Pillars of the analysis
The verdict — today vs 5 years
Today — fairly valued: at $107 trades ~7.5% below its value discounted to today (~$116); the discount is positive but does not reach the margin of safety we require (≥38%).
At 5 years — En valor: the target price ($123) plus dividends yield between the 4% floor and the 10% average return — a reasonable return, though without the margin of a great investment.
The bridge: the return at 5 years exceeds the risk-free rate (4.5%) — but the discount does not reach the required margin of safety (≥38%). To require a 15% annual return, it would need to be bought at ~$74.
Thesis
The business
Con Edison is the purest utility in the group: a regulated monopoly in electricity, gas and steam in New York City (CECONY) and southeastern New York/northern New Jersey (O&R), with no unregulated growth arm adding market risk. It earns what the regulator authorizes (9.40% ROE in CECONY's new electric plan, 2026-2028) on a rate base growing strongly (~9%/year over the current three-year period) under the reliability plan addressing New York City's capacity deficit.
The valuation
It is valued on P/E over attributable net income, which yields the equity value directly (debt is already reflected in earnings and is not subtracted again). At ~$107 it trades at ~19.3× TTM earnings ($2,156M), in line with the pure regulated utility group (Southern Company ~20.7×). The base scenario projects net income starting at +8.3% (anchored in the recent trajectory, TTM +6.6%, and the rate base of the new rate plan, +9%/year) and decelerating to +5.5% by year 5 (the uncertainty of an eventual new rate case post-2028 weighs on the last two years), with the multiple compressing slightly from ~19.3× to 17× — within the band for a pure regulated utility (§4), without the growth premium of a utility with a renewables arm. Dilution from the equity issuance funding capex (~2-3%/year, actual and planned) reduces per-share EPS growth below that of aggregate earnings. That yields ~$123/share → a price CAGR of +3%, +6% with the dividend (yield ~3.2%, growing ~3.5%/year).
The margin of safety
It trades close to intrinsic value, far from the required margin of safety. The base return (+6% total: +3%/year of price plus the dividend) sits in the modest-return zone, below the hurdle for a great investment (~15%). The verdict is Fairly valued: a business with a solid, predictable regulatory moat, trading in line with its comparable group — with no clearly identifiable source of discount (§9), which demands caution: it is not evidently cheap, it merely looks reasonable for a business of stable quality.
What to watch
Three things. Execution of the new 2026-2028 rate plan (authorized ROE 9.40%): that the company keeps earning at or near the authorized level without regulatory friction. The financing of capex that nearly doubles toward 2030 (~$37,700M cumulative): it depends on continuous, well-priced access to debt (~$16,100M planned) and equity (~$5,600M planned) — any deterioration in market conditions or the credit rating raises funding costs and increases dilution. And political affordability pressure: the rate increases funding New York's electric reliability face resistance in an extremely high cost-of-living market, which could trim the authorized ROE in a future rate case.
Educational / informational. Does not constitute investment advice.