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Edison International (EIX) to Gain From Long-term Investments

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Edison International’s (EIX - Free Report) systematic long-term capital investment strategy to strengthen its infrastructure will further enhance its service reliability.

However, this Zacks Rank #3 (Hold) company’s substantial wildfire-related expenses act as a headwind.


Southern California Edison (SCE) incurred a capital expenditure of $5.7 billion in 2022 and forecasts capital expenses of $43.5 billion during the 2023-2028 period. Of the total expenses, $35.5 billion has been allotted for the traditional investment that focuses on expanding its distribution and transmission facilities and generating more electricity. SCE expects to make additional CPUC capital expenditures in the range of $5.3-$6.8 billion between 2024 and 2025.

The company expects strong rate base growth of nearly 6-8% through the 2023-2028 period, which could cause earnings to witness a CAGR of 5-7% during 2025-2028.

California remains committed to reducing its greenhouse gas (GHG) emissions and has set goals to lower the same by 40% from the 1990 level within 2030 and by 85% from the same baseline within 2045. SCE anticipates meeting California's requirements through 2045 and believes that this goal can be achieved most economically through electrifying vehicles.

SCE is currently working with nearly 200 sites to potentially support approximately 4,000 medium and heavy-duty vehicles. To support system reliability, SCE is investing $1.0 billion in utility-owned storage capacity as well as contracting for substantial new clean energy resources.


Multiple factors have contributed to increased wildfire activity and damage from wildfires across SCE's service territory and California. Through Dec 31, 2022, Edison International and SCE recorded total pre-tax charges of $8.8 billion related to the 2017/2018 Wildfire/Mudslide events. The company incurred after-tax net charges to earnings worth $4.7 billion through Jun 30, 2023, in relation to the Wildfire/Mudslide events.

Stocks to Consider

Some better-ranked stocks from the same sector are Vistra Corp. (VST - Free Report) , sporting a Zacks Rank #1 (Strong Buy), and FirstEnergy Corporation (FE - Free Report) and Atmos Energy Corp. (ATO - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for VST’s 2023 earnings per share (EPS) indicates an increase of 205.8% from the previous year’s reported number. The same for sales indicates a year-over-year increase of 46.2%.

FE’s long-term (three to five years) earnings growth rate is 6.45%. The Zacks Consensus Estimate for FE’s 2023 EPS indicates an increase of 5% from the previous year’s reported number.

ATO’s long-term earnings growth rate is 7.25%. It delivered an average earnings surprise of 2.4% in the previous four quarters.


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