Initiated 2026-10-23 · Price $57.33 (close 2026-10-23, stockanalysis.com) · Mkt cap $22.2bn (387mm diluted shares) · Utilities / regulated electric (Southern California Edison) · Model: verified

Rating: Hold — Conviction: Low

Edison is cheap on regulated earnings (9.4x forward, 6.1% yield, rate base growing ~7.5% a year), and before any further Eaton Fire cost the Base case sits well above the price. But Cal Fire has found SCE's equipment responsible for a fire with $24–45bn of estimated losses, the liability reform that would have bounded it died on 2026-09-02, and the shareholder exposure (up to the $4.3bn Liability Cap, or more if claims outrun the ~$21bn Wildfire Fund) is unknowable before the January 2027 bellwether trial. The discount is real, but so is the hole it may be pricing; that is a Hold.

Conviction tests (3a-v-c): T1 fail (Hold → Sell at +1pp, Base −17.9%; Buy at −1pp, +105.8%) · T2 pass (Gordon alone +38.7%, exit alone +18.2%; after a Liability-Cap-sized charge +23.4% and +2.8%, Hold on either) · T3 pass (every FY0 fact and historical series from EDGAR XBRL, the FY2024/FY2025 and Q2 2026 releases and the Q2 10-Q; no est. facts) · T4 fail (Eaton Fire liability: bellwether trial January 2027, fund-administrator approval, CPUC prudence review)

Model value range vs price
Bear $4.82Base $73.63Bull $151.75Price $57.33

Business overview

Edison International is essentially Southern California Edison, the regulated electric utility for much of Southern and Central California; the parent holds little else. FY2025 revenue was $19.3bn and core EPS $6.55 (GAAP $11.58, inflated by TKM and Woolsey cost recoveries). Earnings are an allowed return on rate base, so three variables matter: rate-base growth (a $37.5–40.6bn 2026–30 capex plan, weighted-average rate base $50.8bn rising to $67.9bn), whether the CPUC allows that spending into rates, and wildfire liability, which sits outside the rate formula. 2026 core EPS guidance is $5.90–6.20, with 5–7% growth targeted from 2025 to 2030.

Competition

SCE has a franchise monopoly on wires, so competition shows up in load and in capital rather than in price. Community choice aggregators supply generation to many of its cities; 2016-era projections put the potential at ~40% of SCE's load (Utility Dive; dated, no current figure retrieved). The sharper contest is for capital: investors facing California wildfire risk "demand a higher return or invest elsewhere", per the utilities. The closest listed comparable, PG&E, trades at 7.27x forward earnings and 0.88x book. Sempra (SDG&E) and Xcel trade at 15.95x and 18.33x (stockanalysis, 2026-10-23).

Bull case

  1. Rate base compounds as planned — ~7.5% a year rate-base growth funds 5–7% core EPS growth, with 2027 guided at $6.25–6.65 and no new equity before 2030 per the CEO. Plays out if the CPUC approves the plan and guidance holds. Model: rev_growth, ebitda_margin, terminal_growth
  2. Reform or credit stability re-rates the stock — Newsom and the Assembly Speaker both say the work continues; a 2027 liability package would cut the risk premium toward non-California peers. Model: wacc, exit_ev_ebitda
  3. Eaton stays inside the Fund — the Fund reimburses eligible third-party losses above $1.0bn from ~$21bn of capacity; SCE's $1.6bn of settlements to June cost shareholders $9mm after tax. Plays out if claims settle below ~$21bn without a willful-disregard finding. Model: not in the value range — the Base already assumes no further shareholder Eaton cost

Bear case

  1. Eaton costs exceed the Fund or are disallowed — UCLA estimates $24–45bn of losses; SCE faces 2,000+ lawsuits from 32,000 plaintiffs. A CPUC disallowance costs shareholders up to the $4.3bn Liability Cap, willful disregard removes the cap, and fines are not recoverable. Costs above the Fund would be securitized; who bears them is n/a (unverified). Plays out if the bellwether verdict and claim tally point well above $21bn. Model: not in the value range — quantified in the tail sensitivity below
  2. Downgrade below investment grade — S&P has SCE at BBB- with a negative outlook, and the CEO said there is "nowhere to go" in investment grade. EIX's debt-to-capitalization is 0.66 against a 0.70 covenant. Plays out if S&P or Moody's acts after the trial or a reform miss. Model: wacc, exit_ev_ebitda
  3. Affordability caps the capex plan — higher bills invite CPUC push-back, disallowances and slower rate-base growth. Model: rev_growth, ebitda_margin, terminal_growth

Valuation & balance sheet

Metric (definition) Current Own history (range or 5y avg) Peers Source, as-of
P/E forward (consensus) 9.35x n/a (unverified) PCG 7.27x, SRE 15.95x, XEL 18.33x stockanalysis 2026-10-23
EV/EBITDA (model basis: OI + D&A ex-wildfire items, FY2025, leases excluded) 7.66x 6.1–8.6bn EBITDA FY2023–25 lease-inclusive TTM: PCG 8.76x, SRE 15.61x, XEL 14.43x (EIX 7.31x) releases, 10-Q, stockanalysis 2026-10-23
P/B 1.28x n/a (unverified) PCG 0.88x, SRE 1.70x, XEL 2.05x stockanalysis 2026-10-23
Dividend yield 6.12% n/a (unverified) PCG 1.59%, SRE 3.12%, XEL 3.04% stockanalysis 2026-10-23

Model-implied value range (from model-summary.json; generic module, Gordon-growth DCF and exit-EV/EBITDA DCF, midpoints): Bear $4.82 · Base $73.63 · Bull $151.75 per share, i.e. implied returns of −91.6% / +28.4% / +164.7% vs $57.33. These ranges show how the bull and bear drivers translate into value; they are not price targets.

Balance sheet: net leverage 4.54x FY2025 model EBITDA, falling to 3.9x by Y5 on the Base path; coverage 4.9x. Liquidity: $242mm cash, ~$2.6bn available on SCE's $3.4bn revolver and $1.3bn on the parent's $1.5bn. Nearest material maturity: $3.8bn current long-term debt, including SCE's $1.5bn term loan due March 2027. Debt-to-capitalization 0.66 at EIX (covenant max 0.70), 0.57 at SCE (max 0.65). Ratings: S&P BBB- negative (SCE); Moody's n/a (unverified).

Model note: built and verified (LibreOffice recalculation matched all 3,207 formula cells). Unverified inputs: none. Assumptions without basis: none. No scenario CHECKs. EBITDA excludes wildfire claims, recoveries, impairment and Fund expense (the company's core basis). Base Y1 EPS of $6.06 sits inside guidance. Debt includes $3.0bn of customer-funded recovery bonds. Unrecorded Eaton exposure is outside the model (see Tail). Balances are at 2026-06-30; Q3 is not yet reported.

Relative value vs peers
MetricEIXPCGSREXELPeer medianvs median
P/E (TTM)5.9x9.1x24.3x21.4x21.4x−72%
P/E (forward)9.3x7.3x15.9x18.3x15.9x−41%
PEG2.2x0.8x1.9x1.9x1.9x+16%
EV/EBITDA (TTM)7.3x8.8x15.6x14.4x14.4x−49%
EV/Sales (TTM)3.4x3.5x6.8x6.0x6.0x−44%
P/B1.3x0.9x1.7x2.0x1.7x−25%
FCF yield-1.8%-15.3%-9.5%-15.8%-15.3%+13.6pp
Dividend yield6.1%1.6%3.1%3.0%3.0%+3.1pp
P/E (TTM)SRE24.3xXEL21.4xPCG9.1xEIX5.9x
P/E (forward)XEL18.3xSRE15.9xEIX9.3xPCG7.3x
PEGEIX2.2xSRE1.9xXEL1.9xPCG0.8x
EV/EBITDA (TTM)SRE15.6xXEL14.4xPCG8.8xEIX7.3x
EV/Sales (TTM)SRE6.8xXEL6.0xPCG3.5xEIX3.4x
P/BXEL2.0xSRE1.7xEIX1.3xPCG0.9x
FCF yieldEIX-1.8%SRE-9.5%PCG-15.3%XEL-15.8%
Dividend yieldEIX6.1%SRE3.1%XEL3.0%PCG1.6%

As of 2026-10-23. One source and one definition for every company: aggregator TTM and consensus-forward multiples, EV netting reported cash and including lease liabilities in debt. Not the model's own EV basis (see the report's valuation table). Pages fetched 2026-10-23 after the 4:00pm ET close. Dashed line = peer median. Source: stockanalysis.com /stocks/<ticker>/statistics/, fetched 2026-10-23.

Notes. PEG as given by the source. EIX's TTM P/E is depressed by GAAP earnings that include TKM and Woolsey wildfire cost recoveries (FY2025 GAAP EPS $11.58 vs core $6.55). Negative across the set: regulated capex exceeds operating cash flow for all four.

Scenario stress test

Reasoned from the bull/bear drivers above. The model column comes from the scenario overlays (Base case + shock).

Scenario Effect Mechanism Magnitude Model Δ value vs Base ($/sh)
S1 Fast equity crash − Liquidity de-rating of a low-beta defensive; no funding or operating channel, amplified by leverage Med −$6.84
S2 Slow bear / recession − Decoupled, regulated revenue; recession raises bad debt and slows load, while lower yields offset. Far milder than Base − Bear ($68.81) because the bear case is a liability and credit break, not a demand cycle Low −$0.15
S3 Rapid rate shock − Bond-proxy equity on 66% debt-and-preferred capital; authorized returns reset only with a lag High −$29.96
S4 Slow rate grind − Refinancing at higher coupons; the cost-of-capital mechanism passes part through over time Med −$14.71
S5 Soft-landing cuts + Lower yields re-rate rate-sensitive utilities; leverage magnifies it High +$26.48
S6 Recession-driven cuts + Rate relief outweighs a small load and bad-debt hit Med +$15.02
S7a Credit liquidity shock − BBB- issuer funding ~$8bn a year of capex as spreads gap wider Med −$8.55
S7b Slow default cycle − Customer bad debt and a wider funding spread Low −$0.54
S8 Stagflation − Rates rise while O&M inflation outruns the GRC cycle and affordability limits rate requests High −$21.47
S9a Dollar spike 0 no material effect, not modeled Low $0.00
S9b Dollar slide 0 no material effect, not modeled Low $0.00
S10 Melt-up + Tight credit eases capex funding; modest re-rating Low +$5.13
S11 Energy supply shock − Fuel passes through, but higher bills sharpen rate-case push-back; rates rise Med −$7.96
S12 Mega-cap/AI derating + Rotation into defensive yield names; no fundamental channel Low +$5.13

No row carries the Eaton outcome. Currently active/on watch per the playbook: S3 partially active (price-level leg; 10Y fell to 4.96% on 2026-10-22); S8, S10 and S11 on watch.

Model value change vs Base, by scenario
S3 Rapid rate shock−$29.96S8 Stagflation−$21.47S4 Slow rate grind−$14.71S7a Credit liquidity shock−$8.55S11 Energy supply shock−$7.96S1 Fast equity crash−$6.84S7b Slow default cycle−$0.54S2 Slow bear / recession−$0.15S9a Dollar spike$0.00S9b Dollar slide$0.00S10 Melt-up+$5.13S12 Mega-cap/AI derating+$5.13S6 Recession-driven cuts+$15.02S5 Soft-landing cuts+$26.48

What would change the call

Upgrades if: a 2027 liability package limits subrogation or damages, or claims and the bellwether put Eaton losses clearly inside the ~$21bn Fund, with S&P holding BBB-. Downgrades if: the bellwether or claims imply losses well above $21bn, a willful-disregard or disallowance finding emerges, S&P cuts SCE below investment grade, or 2027 guidance is withdrawn.

Watch items

Sources