Edison International (EIX): A Bull Case Theory

We came crossed a bullish thesis connected Edison International connected Research Corner’s Substack by Qian Yuantian. In this article, we volition summarize the bulls’ thesis connected EIX. Edison International's stock was trading astatine $58.89 arsenic of November 28th. EIX’s trailing and guardant P/E were 7.72 and 9.67 respectively according to Yahoo Finance.

Edison International, done its subsidiaries, engages successful the procreation and organisation of electrical power. EIX presents an charismatic buying accidental pursuing a steep stock terms diminution triggered by capitalist fears implicit imaginable liabilities from the Eaton Fire. Despite a 37% sell-off, the marketplace absorption appears excessive fixed the company’s durable regulated-utility model, predictable net base, and important fiscal protections unsocial to California’s regulatory framework.

EIX operates chiefly done Southern California Edison (SCE), 1 of the nation’s largest regulated electrical utilities, earning returns done CPUC-approved complaint basal investments alternatively than volumetric energy sales. With a 10.33% authorized ROE—among the highest successful the industry—SCE’s semipermanent visibility is anchored by multi-year wide complaint lawsuit decisions supporting grid modernization, wildfire mitigation, and cleanable vigor infrastructure.

While lawsuit maturation is limited, California’s robust commercialized economy, electrification push, and rapidly expanding powerfulness request reenforce sustained superior deployment, driving management’s 5–7% EPS maturation outlook and supporting decades-long dividend expansion.

Concerns implicit wildfire liabilities, a recurring contented for California utilities, stay the superior overhang. However, EIX benefits from the state’s Wildfire Fund—a $21 cardinal liquidity mechanics that caps SCE’s exposure, limiting Eaton Fire liabilities to $3.9 billion, afloat recoverable done the fund. Historical precedent shows stock prices rebound erstwhile liability pathways go clear, and SCE’s long-standing signifier of outgo recovery, information certification maintenance, and regulatory alignment supports this view. Though leverage has risen, the company’s fiscal posture remains manageable comparative to peers, with astir each CapEx feeding rate-base growth.

Given the company’s antiaircraft monopoly economics, beardown regulatory tailwinds, wildfire backstops, and meaningful undervaluation, the banal offers compelling risk-adjusted upside. With an implied worth of $79.11—43.1% supra existent levels—EIX presents a mispriced, sentiment-driven accidental poised for betterment arsenic liabilities are clarified and capitalist assurance normalizes.