Investment Thesis
ConEd exhibits strong operating margins (23.1%) and stable revenue typical of regulated utilities, but is in an unsustainable financial position with negative free cash flow of -$4.3B and a severely depleted cash balance of $147M. The company must fund significant capex through debt despite weak interest coverage (3.8x) and minimal returns on deployed capital (ROE 3.6%, ROA 1.2%).
Strengths
- High operating margin of 23.1% and net margin of 18.1% reflecting regulated utility pricing power
- EPS growth of 7.6% YoY despite flat revenue indicates operational efficiency improvements
- Stable regulated utility business model provides revenue visibility and predictability
Risks
- Negative free cash flow of -$4.3B annually is unsustainable; company generating only $174M operating cash flow against $4.5B capex
- Critical cash position of $147M relative to $25.8B debt and $4.5B annual capex creates refinancing dependency and financial vulnerability
- Weak returns on capital (ROE 3.6%, ROA 1.2%) combined with 1.01x debt-to-equity and 3.8x interest coverage suggest thin margin for error
Key Metrics to Watch
- Operating cash flow trend and capex requirements - negative FCF sustainability is primary concern
- Cash balance trajectory and debt refinancing costs - watch for credit rating changes
- Regulated rate approvals and allowed return on equity - critical to improving returns on capital
Financial Metrics
Revenue
5.1B
Net Income
924.0M
EPS (Diluted)
$2.54
Free Cash Flow
-4.3B
Total Assets
74.7B
Cash
147.0M
Profitability Ratios
Gross Margin
N/A
Operating Margin
23.1%
Net Margin
18.1%
ROE
3.6%
ROA
1.2%
FCF Margin
-84.2%
Balance Sheet & Liquidity
Current Ratio
1.19x
Quick Ratio
1.19x
Debt/Equity
1.01x
Debt/Assets
0.0%
Interest Coverage
3.82x
Long-term Debt
25.8B
Disclaimer: This analysis is generated by AI based on publicly available SEC EDGAR filings.
It does not include stock price data and should not be considered financial advice.
All fundamental data is sourced from SEC public domain filings.
Always conduct your own research before making investment decisions.
Data Source: SEC EDGAR |
Analysis Date: 2026-05-09T10:27:35.651186 |
Data as of: 2026-03-31 |
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