EDISON INTERNATIONAL (EIX): what the price assumes

boothcheck covers EDISON INTERNATIONAL (EIX) but does not put one priced-in number on it: here the defensible answer is the evidence rather than a point estimate. boothcheck publishes no house fair value, target price, or buy/sell rating. Narrative composed 2026-07-25.

Generated: 2026-08-30 · Source: https://boothcheck.com/report/EIX

Headline

What The Price Assumes (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

The price sits below what even a 5%/yr operating-profit decline would warrant; the inversion reports a bound, not a solved growth path.

Solve inputs: computed at a 5.5% cost of capital with 4% terminal growth over a 5-year stage (computed at the 5.5% minimum rate; the CAPM rate 5.3% sits below it).

How unusual the bet is: within-range (limited comparison data)

Valuation X-Ray

The price is supported by asset-based and earnings-power and relative-multiple and growth-DCF value. A value/asset-supported name, not a pure growth bet.

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

Families that justify the price: Asset, Earnings, Relative, Growth

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 4.1%); the inversion above states its own rate.

Per-Model Detail (n=16)

Economic-Unit Decomposition (Sum Of The Parts)

Only one reportable economic unit is present in the current topology source. Consolidated operating lenses remain available, but there is no multi-unit decomposition.

No total common-equity value is stated. One or more material units lack a supported unit value. The displayed values are an indicative subtotal; consolidated debt and cash cannot be applied to a fraction of the company.

Solvency

Bullet Takeaways

• The growth engine is mechanical and disclosed: "SCE's year-end rate base was $48.2 billion at December 31, 2025, compared to $45.7 billion at December 31, 2024", and the utility has laid out $40.6 billion of capital spending for 2026 through 2030.
• The open question is the January 2025 Eaton Fire, where the company states it is "currently unable to reasonably estimate a range of losses that may be incurred in connection with the Eaton Fire", while the state fund reported claims-paying capacity above $21 billion for that fire and SCE's reimbursement obligation is capped near $4.3 billion.
• Next milestone is regulatory, not financial: SCE files its cost-recovery application after third-party claims are substantially resolved, and the 10-K notes "The CPUC has not applied the California Wildfire Legislation prudency framework to a wildfire cost-recovery proceeding".

Bull Case

An electric utility of this kind is not really in the business of selling electricity. It is in the business of putting capital into the ground and being paid a regulated return on it, and the two numbers that define that business are both disclosed. SCE's rate base was $48.2 billion at the end of 2025, up from $45.7 billion a year earlier, and the 10-K states that "Based on the approved capital structure and costs, SCE's weighted average return on rate base for 2026 will be 7.59%". Growth then becomes a spending question rather than a demand question. The company has answered it: $40.6 billion of capital expenditure planned across 2026 through 2030, of which $30.2 billion goes to distribution and $4.7 billion to transmission.

That mix is where the return data gets interesting. Wires businesses convert more of each revenue dollar into operating profit than utilities carrying gas distribution or merchant generation, and Edison International runs at a trailing operating margin near 29.7%, the highest of its cohort. NEE sits at 29.5%, DUK at 27.2%, D at 26.2%, AEP and SO both at 24.2%, EXC at 21.0% and XEL at 18.0%. Edison does this on $19.6 billion of revenue against DUK's $33.2 billion and SO's $30.2 billion, so the margin advantage is structural rather than a scale effect. Only about $1.1 billion of the five-year capital plan goes to generation. Nearly all of it is poles, wires and substations, and that is the part of the utility business with the cleanest regulatory recovery.

Demand is going the right way for a wires owner. The transmission side alone filed a 2026 revenue requirement of $1.5 billion, a $157 million or 12% increase over 2025 rates, and SCE serves 15 million people across Southern, Central and Coastal California. Electrification of transport and buildings puts more load onto the same poles the company is already rebuilding, which is close to the best position a regulated asset owner can occupy: rising throughput on assets whose cost is already in rates.

The wildfire framework is the piece most casual readers get wrong, and it is the reason the bull case exists at all. California's legislation built a state fund; the administrator has confirmed the Eaton Fire is a covered wildfire, and reported claims-paying capacity for that fire above $21 billion as of September 30, 2025. SCE carries $1.0 billion of customer-funded self-insurance for 2025 ignitions and is reimbursed from the fund for eligible third-party damage claims above that. Most importantly, "Because SCE held a valid safety certification at the time of the Eaton Fire, SCE will be presumed to have acted prudently", and its obligation to repay the fund for any amounts the commission disallows is capped at approximately $4.3 billion. Against a company valued near $30.9 billion, that is a bounded number attached to an event that reads, in headlines, as unbounded.

The operating business kept working through all of it. First-quarter 2026 net income was $531 million, or $1.38 per share, and management affirmed a 2026 basic earnings guidance range of $5.86 to $6.16 per share. The rate case that lifted those earnings was adopted in the third quarter of 2025. Regulated utilities are slow, and slow cuts both ways: the recovery mechanism grinds forward at the same pace as the liability.

Bear Case

The variable with the most leverage on this investment is not the interest rate, the price of gas, or the pace of electrification. It is what a state commission eventually decides about a fire that started in January 2025, and the honest position on that is the company's own: Edison International and SCE are "currently unable to reasonably estimate a range of losses that may be incurred in connection with the Eaton Fire". Not a wide range. No range. The filing also records that $949 million of wildfire claim costs were recognized in 2025 for that event, which tells you the meter is running even while the total is unknowable.

The statutory protections that make the bull case are real but conditional, and the conditions have never been tested. The 10-K says flatly that "The CPUC has not applied the California Wildfire Legislation prudency framework to a wildfire cost-recovery proceeding". There is a presumption of prudence because SCE held a safety certification, and there is a reimbursement cap near $4.3 billion, but that cap falls away if the fund administrator concludes SCE's conduct amounted to conscious or willful disregard of the rights and safety of others. The company's own risk factors do not oversell the shield either, warning that "The Wildfire Fund and other provisions of the California Wildfire Legislation may not be sufficient or effectively mitigate the significant risk faced by California investor-owned utilities". A framework that has never been exercised is a framework whose behavior under stress is a forecast, not a fact.

Affordability is the constraint that binds all of this together, and it works against the shareholder from a second direction. Every dollar of the $40.6 billion capital plan, every dollar of the $4.6 billion of wildfire mitigation spending inside it, and every dollar of securitized wildfire cost eventually appears on a California electricity bill. Commissions that face angry ratepayers disallow costs, delay decisions, and trim revenue requirements. That is not a hypothetical mechanism; it is the ordinary way regulatory risk shows up. And the customer has an exit. NEE's own filing makes the point about its Florida utility in language that applies equally here: "Because any customer may elect to provide its own electric services, FPL effectively must compete for an individual customer's business". Rooftop solar, storage and direct-access programs let the customers with the best credit and the highest bills leave first, which raises the rate the remaining customers must carry.

Then there is the balance sheet, which for a utility is the business. Net borrowings run about $41.4 billion against a market value near $30.9 billion, and interest is covered roughly 3 times over. A company financing a $40.6 billion capital program while carrying an unquantified legal liability is a company whose credit rating is doing a lot of quiet work, and the market for its paper is not free. Edison agreed on April 30, 2026 to sell $500 million of 5.00% senior notes due 2028, a short maturity for a company funding forty-year assets. Every family of valuation method already puts its central estimate above today's price, so the bear thesis here is not that the shares are expensive. It is that the discount is rational, and that a discount attached to an open-ended liability can persist for as long as the liability stays open, which in California wildfire proceedings has historically been measured in years rather than quarters.

Valuation

Today's price works out to roughly 14 times company-wide operating profit, which is low enough that it sits below what even a 5% annual decline in that profit would warrant. That is a boundary rather than a solved figure, and it should be read as one: the inversion arithmetic does not stand behind a precise number for this company, and the useful statement is the direction. The price is not asking the utility to grow. It is not even asking it to hold flat.

The disagreement among methods is unusually one-sided, and it is worth being precise about which way. The price sits at roughly 0.79 times where the asset-value methods land, about 0.80 times the earnings-power methods, around 0.63 times the peer-multiple methods, and near 0.64 times the growth-projection methods. Every family's central estimate is above the price. When that happens, the interesting question stops being whether the shares are dear and becomes why the market insists on paying less than any conventional lens suggests. The answer is not in the valuation arithmetic. It is in the Eaton Fire, where the company itself declines to name a loss range, and no standard method knows how to price a liability with no stated upper bound.

Against the cohort the operating figures are competitive and the price is not. Edison earns a trailing operating margin near 29.7%, ahead of DUK at 27.2%, AEP at 24.2% and XEL at 18.0%, and its revenue grew faster than EXC's 4.6% over the trailing year. What separates it from those names is jurisdiction. A regulated utility's earnings quality is a function of the commission that sets its rates and the tort environment its equipment sits in, and Southern California is the hardest version of both in the country.

The balance sheet is where the risk actually concentrates. Net borrowings of about $41.4 billion sit against gross borrowings near $41.5 billion, which is to say there is essentially no cash cushion: liquid assets are $168 million. Net borrowings run about 7.6 times operating profit, or roughly 9 times after tax, and operating profit covers interest about 3 times. Those are ratios a regulated monopoly can carry in normal conditions, because regulated cash flows are the most predictable in the corporate world. They are also ratios that leave very little room if a cost-recovery proceeding goes badly. The share count has been essentially flat, growing about 0.3% a year over four years, so the equity has not been diluted to fund the capital plan so far.

What a buyer at this price is underwriting is not a growth forecast. It is a legal and regulatory outcome, with a bounded reimbursement obligation of approximately $4.3 billion on one side and an unquantified claims pool on the other, sitting on top of a wires business whose economics are, by the numbers, the strongest of its peer group.

Catalysts

First-quarter results arrived April 28, 2026. Net income was $531 million, or $1.38 per share, against $1,436 million, or $3.73 per share, in the first quarter of 2025, a comparison distorted by items in the prior-year period rather than by operations. Management affirmed FY2026 basic earnings guidance of $5.86 to $6.16 per share and pointed to the third-quarter 2025 adoption of the general rate case decision as the driver of the year-over-year improvement at the utility.

The regulatory calendar is the one that matters. SCE will file its application with the CPUC for review of Eaton Fire costs only after it has resolved all, or substantially all, third-party damage claims, so the timing of the cost-recovery proceeding is downstream of the settlement pace. In January 2026 SCE filed a cross-complaint against certain public and private entities whose actions or inaction may have contributed to the fire, which is an attempt to shift part of the burden before that proceeding begins. Separately, the company intends to file an application requesting at least $3 billion of advanced metering capital spending to be deployed between 2026 and 2033.

Financing continues alongside. On April 30, 2026 Edison International agreed to sell $500 million of 5.00% senior notes due 2028. On the rate side, the 2026 numbers are already fixed: an authorized cost of long-term debt of 4.71%, and a weighted average return on rate base of 7.59% for the year. On the transmission side, the 2026 annual revenue requirement filed with FERC in November 2025 came to $1.5 billion, a 12% increase over 2025 rates, effective January 1, 2026.

Peer Cohorts (Per Segment, With Filing Citations)

Electric utility (Southern California Edison) (reported)

• NEE (NextEra Energy Inc)
• FY2025 10-K: …FPL relies upon Florida law for access to public rights-of-way. Because any customer may elect to provide its own electric services, FPL effectively must compete for an individual customer's business. As a practical matter, few customers provide their own service at the present time since FPL's cost of service is…
• FY2025 10-K: …the acquisition and retirement of an electric generation facility (see Note 1 - Rate Regulation) and capacity payments related to PPAs; • Energy Conservatio n - costs associated with implementing energy conservation programs; and • Environmental - certain costs of complying with federal, state and local environmental…
• DUK (DUKE ENERGY CORPORATION)
• FY2025 10-K: …SC 15 Bad Creek Hydro Water SC 1,640 Jocassee Hydro Water SC 780 Cowans Ford Hydro Water NC 324 Keowee Hydro Water SC 152 Other small facilities (18 plants) Hydro Water NC/SC 584 Utility-Scale Solar (seven sites) Renewable Solar NC 170 Battery Storage (two sites) Renewable Storage NC 75 Total Duke Energy Carolinas…
• FY2025 10-K: …with federal partners at the Federal Bureau of Investigation, Department of Energy, Department of Homeland Security, and state partners including the national guard, law enforcement and universities. • The CAO of Duke Energy has over 29 years of experience in delivering secure information technology solutions across…
• SO (SOUTHERN CO)
• FY2025 10-K: …power plants. PowerSecure develops distributed energy and resilience solutions and deploys microgrids for commercial, industrial, governmental, and utility customers. See "The Southern Company System" herein for additional information. Also see Note 15 to the financial statements in Item 8 herein for information…
• FY2025 10-K: …Southern Company Gas also contracts for transportation and storage services from interstate pipelines that are regulated by the FERC. When firm pipeline services are temporarily not needed, Southern Company Gas may release the services in the secondary market under FERC-approved capacity release provisions or utilize…
• AEP (AMERICAN ELECTRIC POWER CO INC.)
• FY2025 10-K: …and Subsidiaries Indiana Michigan Power Company and Subsidiaries Ohio Power Company and Subsidiaries Public Service Company of Oklahoma Southwestern Electric Power Company Consolidated Audited Financial Statements and Management's Discussion and Analysis of Financial Condition and Results of Operations 40 AMERICAN…
• FY2025 10-K: …srt:AffiliatedEntityMember aep:SouthwesternElectricPowerCompanyMember 2023-01-01 2023-12-31 0000004904 aep:AEPTexasInc.Member srt:AffiliatedEntityMember 2023-01-01 2023-12-31 0000004904 aep:AppalachianPowerCompanyMember srt:AffiliatedEntityMember 2023-01-01 2023-12-31 0000004904…
• D (DOMINION ENERGY, INC)
• FY2025 10-K: …operations as well as certain wholesale customers. Revenue provided by such electric transmission operations is based on a FERC-approved formula rate mechanism under DESC's open access transmission tariff or based on retail rates established by the South Carolina Commission. Revenue provided by DESC's electric…
• FY2025 10-K: …from private owners by condemnation, if necessary. Many electric lines are on publicly-owned property, where permission to operate can be revoked. In addition, DESC owns 454 substations. DESC's natural gas system includes approximately 20,000 miles of distribution mains and related service facilities, which are…
• EXC (EXELON CORPORATION)
• FY2025 10-K: Potomac Electric Power Company Purchase and regulated retail sale of electricity District of Columbia and Major portions of Montgomery and Prince George's Counties, Maryland Transmission and distribution of electricity to retail customers Delmarva Power & Light Company Purchase and regulated retail sale of electricity…
• FY2025 10-K: …and other information that the Registrants file electronically with the SEC. These documents are also available to the public from commercial document retrieval services and free of charge at the Registrants' website at www.exeloncorp.com. Information contained on the Registrants' website shall not be deemed…
• XEL (XCEL ENERGY INC)
• FY2025 10-K: …transmits, distributes and sells electricity. NSP-Minnesota and NSP-Wisconsin electric operations are managed on the NSP System. NSP-Wisconsin also purchases, transports, distributes and sells natural gas to retail customers and transports customer-owned natural gas. Natural gas customers 0.1 million Total assets…
• FY2025 10-K: …Services - NSP-Minnesota and NSP-Wisconsin have contracts with MISO and other regional transmission service providers to deliver power and energy to their customers. Wholesale and Commodity Marketing Operations NSP-Minnesota conducts wholesale marketing operations, including the purchase and sale of electric…

Methodology Note

• Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
• Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
• Economic-unit decomposition (SOTP): each disclosed business unit is assigned its native valuation basis before any multiple is applied. Operating units are valued on enterprise value; funded financial units are valued on their own common equity, because their borrowings fund earning assets rather than levering the parent. A company total is stated only once every material unit carries a supported value and the parent capital bridge reconciles.
• Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
• Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.