Consolidated Edison CompanyED

Morningstar Rating

Stock Research and Analysis

by Ryan McLean

Consolidated Edison's 200-year-old wires-and-pipes business generates dependable earnings and dividends. Furthermore, New York's need for significant infrastructure should enable Con Ed to increase its rate base, and hence its earnings, over time.

About Read more

Bulls Say

Con Ed has raised its dividend each year for more than three decades.

At our fair value estimate, Con Ed's dividend yields a healthy 5%.

Con Ed's infrastructure investments will allow it to collect higher rates and increase its earnings faster than load growth.

With its largely regulated business mix, Con Ed produces stable and predictable cash flows.

Con Ed's recent sale of its unprofitable competitive energy businesses will help the firm concentrate on its core strengths in energy transmission and distribution. Read more

Bears Say

Over the long term, Con Ed should see only modest demand growth of 1.5%-2.0% in its service territories.

A lack of generation capacity means that Con Ed must purchase most of its electricity and gas--exposing the firm to potentially higher wholesale prices that could drive customer bills to politically sensitive levels.

Con Ed was recently awarded relatively weak terms in its most recent electric rate ruling, casting doubt on the firm's traditionally supportive regulatory environment. Read more

Strategy

Con Ed is planning more than $2 billion in capital expenditures annually in order to maintain reliability and meet increasing capacity demand in its New York market. The majority of these expenditures Read more

Management

Kevin Burke, formerly a lawyer and COO at Con Ed, became CEO in 2005 and was elected chairman in 2006. Burke, whose rise to Con Ed's top position spans more than 30 years, replaced now-retired Eugene McGrath. We think Burke's extensive history at Con Read more

Profile

Consolidated Edison is a holding company for two regulated utilities (Con Ed of New York and Orange & Rockland) that provide steam, natural gas, and electricity to customers Read more

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