Investment Thesis
Edison International demonstrates strong operational performance with 9.8% revenue growth and 26.2% operating margins, but faces critical financial sustainability issues. An interest coverage ratio of 0.8x indicates the company cannot cover interest payments from operating income, combined with negative free cash flow of -$112M and liquidity ratios below 1.0, signaling financial distress that outweighs growth benefits.
Strengths
- Strong operating margin of 26.2% reflecting pricing power and operational efficiency
- Solid revenue growth of 9.8% year-over-year, outpacing typical utility sector growth
- Positive operating cash flow of $1.4B providing base for dividend and debt service
Risks
- Interest coverage of 0.8x - operating income insufficient to cover interest expense, indicating unsustainable debt burden
- Negative free cash flow of -$112M despite positive operating cash flow reveals capex exceeds sustainable levels relative to operations
- Liquidity crisis signals with current ratio of 0.74x and quick ratio of 0.68x below 1.0, indicating potential near-term payment stress
- Excessive leverage with 2.33x debt-to-equity ratio and $40.3B long-term debt with weak capital efficiency (ROE 3.1%, ROA 0.6%)
- Dependence on capital markets or non-operating income to service debt due to interest coverage below 1.0x
Key Metrics to Watch
- Interest coverage ratio - must improve above 1.0x to indicate operational sustainability
- Free cash flow trend - critical to monitor if negative FCF reverses to positive territory
- Current ratio and cash position - need improvement above 1.0x to resolve liquidity concerns
Financial Metrics
Revenue
4.1B
Net Income
531.0M
EPS (Diluted)
$1.37
Free Cash Flow
-112.0M
Total Assets
94.5B
Cash
168.0M
Profitability Ratios
Gross Margin
N/A
Operating Margin
26.2%
Net Margin
12.9%
ROE
3.1%
ROA
0.6%
FCF Margin
-2.7%
Balance Sheet & Liquidity
Current Ratio
0.74x
Quick Ratio
0.68x
Debt/Equity
2.33x
Debt/Assets
80.0%
Interest Coverage
0.77x
Long-term Debt
40.3B
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: 2026-05-06T12:58:03.685139 |
Data as of: 2026-03-31 |
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