New-York-based Consolidated Edison (ED) has a market capitalization of $27 billion. ED stock has shown a smart rally and has comfortably outperformed peer utilities so far this year. The chart below shows the comparative stock price movement of Consolidated Edison and peer utilities along with broader markets.
On December 13, 2017, Consolidated Edison stock was trading at an EV-to-EBITDA valuation of 11x. Its five-year historical average comes below 10x. Thus, ED stock, like almost all the peer utilities, seems to be trading at a significant premium compared to its historical average as well as to the industry average.
Consolidated Edison stock seems pricey given its price-to-earnings multiple as well. It’s currently trading at a PE multiple of 22x while utilities’ average PE multiple is around 20x.
Consolidated Edison has a mean price target of $80.6 against its current market price of $88.0, implying a potential downside of more than 8% going forward.
Among the 14 analysts tracking ED, five analysts rate the stock as a “sell,” while one rates it as a “strong sell.” Seven analysts recommend ED as a “hold” and one analyst rates it as a “strong buy.”
Read how broader utilities (XLU) have played out recently in Market Realist’s series How Utilities Are Performing Compared to Broader Markets.