Consolidated Edison, Inc.EDNYSE

Overview Intelligence Charts News Fundamentals DCF Key Metrics TTM Financials Earnings Growth Rating Analysts Institutional Peers Historical

DCF Valuation

DCF Valuation Summary

Strong Buy

Fair Value: $191.12 per share(market-calibrated)

+67.8%

Upside to Fair Value

Current

$113.92

Pure Model

$209.08

Fair Value

$191.12

Bull Case

$254.66

Bear Case

$189.42

Market Reality Check

Model Terminal Growth

2.00%

Market-Implied Growth

0.50%

Calibrated Growth

1.48%

Fair value uses 65% model / 35% market-implied terminal growth. Pure model: $209.08.

What's Driving This Ratingfor ED

↓

CapEx normalizing toward maintenance

Historical CapEx is 27.92% of revenue (heavy investment phase). Model fades this to 5.00% by Year 10, freeing up ~$4.8B in annual FCF. This is the biggest driver of long-term cash flow improvement.

✓

Premium margins already priced in

EBIT margin of 20.83% is already well above sector average. The model holds this level — there's limited room for margin expansion to drive upside. Valuation depends primarily on revenue growth.

⚠

Analyst growth decelerates sharply

Revenue growth drops from 11.05% in Year 1 to 2.00% by Year 5 (per analyst consensus). This growth deceleration is a key reason the model may undervalue the stock if growth re-accelerates.

↔

Perpetuity and exit methods disagree

Perpetuity growth gives $245.67/share (29.1x terminal FCF) while exit multiple gives $172.48/share (21.1x terminal FCF). The base case averages both methods.

🎯

Market pricing in lower growth than model

The market implies only 0.50% perpetual growth — 150bps below the model's 2.00%. This suggests the market sees headwinds or risks not in the model.

✓

Strong cash flow conversion

Year 10 FCF/EBITDA conversion of 75.71% indicates efficient cash generation. FCF reaches $5.4B by Year 10 (25.89% FCF margin).

Weighted Average Cost of Capital (WACC)

Cost of Equity (CAPM)

Risk-Free Rate (Rf)4.50%

Beta (β)0.39

Market Risk Premium4.50%

*Using current implied premium (4.5% per Damodaran 2026), not historical (6.5%)

Cost of Equity (Re)6.25%

Cost of Debt

Pre-tax Cost of Debt3.67%

Tax Rate14.87%

After-tax Cost of Debt3.12%

Equity Weight (E/V)58.62%

Debt Weight (D/V)41.38%

WACC Calculation

WACC = (E/V × Re) + (D/V × Rd × (1-Tc))

WACC = (58.62% × 6.25%) + (41.38% × 3.12%)

= 5.50%

10-Year Free Cash Flow Projections(showing years 1, 3, 5, 7, 10)

Year	Year 1	Year 3	Year 5	Year 7	Year 10
Revenue	$16.9B	$17.8B	$18.9B	$19.7B	$20.9B
EBIT	$3.5B	$3.7B	$3.9B	$4.1B	$4.3B
Tax	$525M	$551M	$585M	$609M	$646M
NOPAT	$3.0B	$3.2B	$3.3B	$3.5B	$3.7B
+ Depreciation	$2.3B	$2.4B	$2.5B	$2.6B	$2.8B
- Capex	$4.7B	$4.1B	$3.3B	$2.5B	$1.0B
- Δ NWC	$177M	$9M	$39M	$41M	$43M
Free Cash Flow	$361M	$1.5B	$2.5B	$3.6B	$5.4B
Discount Factor	0.948	0.852	0.765	0.687	0.585
Present Value	$343M	$1.2B	$1.9B	$2.5B	$3.2B

FCF Formula: Free Cash Flow = NOPAT + Depreciation - Capex - Change in Net Working Capital

Terminal Value Calculation

Perpetuity Growth Method

Year 10 FCF$5.4B

Terminal Growth Rate2.00%

WACC5.50%

TV = FCF₁₀ × (1+g) / (WACC-g)

Terminal Value$157.4B

PV of Terminal Value$92.1B

Exit Multiple Method

Year 10 EBITDA$7.1B

Exit Multiple (EV/EBITDA)16.0x

TV = EBITDA₁₀ × Exit Multiple

Terminal Value$114.1B

PV of Terminal Value$66.8B

Valuation Summary

Perpetuity Growth Method

PV of Projected FCFs$19.4B

PV of Terminal Value$92.1B

Enterprise Value$111.5B

(-) Net Debt$26.5B

Equity Value$85.0B

Shares Outstanding346M

Price per Share$245.67

Exit Multiple Method

PV of Projected FCFs$19.4B

PV of Terminal Value$66.8B

Enterprise Value$86.2B

(-) Net Debt$26.5B

Equity Value$59.7B

Shares Outstanding346M

Price per Share$172.48

Pure Model Fair Value

$209.08

Average of perpetuity growth and exit multiple methods (before market calibration)

Sensitivity AnalysisPrice per Share

WACC ↓ / Growth →	1.00%	1.50%	2.00%	2.50%	3.00%
3.50%	$327.66	$384.92	$365.43	$346.88	$329.20
4.50%	$234.36	$259.36	$294.37	$346.88	$329.20
5.50%	$178.48	$191.86	$209.08	$232.03	$264.16
6.50%	$140.12	$148.17	$158.01	$170.31	$186.12
7.50%	$111.58	$116.80	$122.97	$130.37	$139.41

How to read: This table shows how the valuation changes with different WACC (discount rate) and terminal growth rate assumptions. Green = undervalued, Red = overvalued.

Scenario Analysis

Bear Case

$189.42

66.3% vs current

• -25% vs analyst consensus
• Terminal growth: 2.0%
• Beta: 0.48

Base Case

$209.08

83.5% vs current

• Analyst consensus
• Terminal growth: 2.0%
• Beta: 0.39

Bull Case

$254.66

123.5% vs current

• +25% vs analyst consensus
• Terminal growth: 2.5%
• Beta: 0.33

Key Assumptions & Drivers• Utilities Sector

Growth Assumptions (Select Years)

Year 1 Revenue Growth11.05%

Year 3 Revenue Growth0.46%

Year 5 Revenue Growth2.00%

Year 7 Revenue Growth2.00%

Year 10 Revenue Growth2.00%

Terminal Growth Rate2.00%

Margin & Efficiency

Current EBIT Margin20.83%

Tax Rate14.87%

Historical Capex / Rev27.92%

Terminal Capex / Rev5.00%

NWC / Revenue10.51%

Key Drivers: Revenue growth, operating margin expansion, capex efficiency, and working capital management are the primary drivers of cash flow generation. Terminal value assumptions significantly impact final valuation.

Institutional-Grade Methodology

Actual Company Data: Revenue, EBIT, Capex, NWC, Tax Rate, Interest Expense, Beta

Market Assumptions: Risk-free: 4.5% (10Y), MRP: 4.5% (Damodaran 2026), Exit: 16x EV/EBITDA (Utilities sector)

This DCF model is for informational purposes only. Projections are based on assumptions that may not materialize. Past performance does not guarantee future results. Consult a financial advisor before making investment decisions.

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