(II) Consolidated Edison: Improving Prospects At A High Price
In the past five years, I owned ED two times. Last time, I sold it at the end of December 2021 for USD 83.5 per share, once it approached my then fair estimate of its value.
Summary
Consolidated Edison experienced a significant increase in price since the beginning of the year.
Capital spending will be significantly increased in the upcoming years.
After several years of struggle, we might see the end to failed gas infrastructure projects and increase of the profitability to the regulatory approved levels in future.
Due to recent run up in utilities sector prices, Consolidated Edison current prices seems to be above the fair value of the company.
Investment Thesis
For all of those who studied finance, Consolidated Edison (NYSE:ED), or ED, is a household name. Name a book related to investment analysis, and the name of Consolidated Edison appears in it. It is this way that I first started following ED. Over the past 10 years, I followed it and valued it multiple times, using any technique I would find fit at the time. In that period, I purchased ED two times, the latest being in February 2021 for a price of USD 67 per share. During this ten-year period, ED faced many challenges. This time, as ever, ED is faced with new challenges of increasing energy prices, aging infrastructure and the need to become aligned with the global decarbonization goals. The analysis below will show why I decided to sell my holdings in ED at a much lower price than of that today.
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