Consolidated Edison Inc. (ED) is a regulated electric and gas utility serving the New York metropolitan area, with a conservative balance sheet, very high reported profit margins and signs of slowing top‑line and per‑share earnings performance.
The company shows several clear strengths: book value per share has compounded at about 8.38% over five years, reflecting steady equity accretion; leverage is extremely low with debt‑to‑equity near 0.0094 and effectively zero net debt, supporting a conservative capital structure; and reported profitability is unusually high with a gross margin around 93.5%, a net margin near 45.7% and an operating margin reported at 110.2% in the most recent data (Profit Margin Trends).
Operating cash flow also exceeds net income (OCF TTM $2.69B vs. Net Income TTM $1.10B), an indicator of earnings quality and cash conversion (Earnings Quality Analysis, Revenue & Net Income).
There are, however, notable weaknesses to monitor. Per‑share results have been weakening: revenue per share fell to $7.18 in the most recent period with 1‑year revenue‑per‑share growth of -17.9%, and diluted EPS is lower at $3.28 with recent EPS 1‑year growth of about -11.9% in the latest reported interval (EPS Diluted & Revenue per Share, Revenue & EPS Growth).
Return on equity has deteriorated to roughly 2.4% in the latest quarter and ROE growth is negative (about -20.6%), signalling declining returns to shareholders (Return on Equity (ROE)).
Liquidity is also a concern: the current ratio is below 1.0 at about 0.877, and operating cash flow has trended down from roughly $3.42B to $2.69B while investing cash flow became more negative (Investing CF TTM ≈ -$5.47B) in the most recent observations (Strategic Capital Allocation).
Key fundamental metrics to watch going forward are top‑line and per‑share trends (revenue per share and diluted EPS growth) and the company’s cash generation versus earnings (Revenue & Net Income), together with short‑term liquidity (current ratio) and ROE trajectory; also monitor investing and financing cash flow trends and the P/E trajectory (most recent P/E ≈ 22.0x) for valuation context (Revenue & Net Income, EPS Diluted & Revenue per Share, Earnings Quality Analysis, Return on Equity (ROE), Strategic Capital Allocation, Price-to-Earnings (PE) Ratio Trend).
The foundation of business quality and long-term value creation
In recent quarters, CONSOLIDATED EDISON INC’s revenue has been variable: the most recent quarterly revenue (2021-09-30) was $1.68B, following $1.89B reported for the quarter ending 2020-12-31 and $522.0M for 2020-06-30. Net income for recent quarters shows a downward trajectory from $493.0M (2020-09-30) to $418.0M (2020-12-31) and $165.0M (2021-06-30), with $190.0M reported for 2020-06-30.
Over the longer series, there are several notable inflection points: revenue reached $8.24B on 2013-12-31 and fell to -$3.24B on 2014-12-31 in the reported dataset; net income peaked at $766.0M on 2018-12-31 and showed other large quarterly swings (for example, $505.0M on 2017-12-31). The most recent quarterly revenue was $1.68B. The most recent net income was $165.0M.
Why Growth Matters
Consistent revenue and earnings growth are the lifeblood of successful long-term investments. Companies that can grow their top line (revenue) and bottom line (net income) over many years demonstrate they have products or services customers value and are willing to pay for repeatedly.
Revenue Growth shows whether the company is expanding its market reach, gaining market share, or successfully launching new products.Net Income Growth demonstrates the company can convert that revenue into actual profits while managing costs effectively.
Look for steady, sustainable growth rather than erratic spikes. The best businesses compound earnings year after year, creating tremendous value for shareholders over time. Companies that can grow earnings faster than revenue are improving their profitability—a sign of operational excellence and competitive strength.
Year-over-year growth rates for revenue and earnings per share
Reading the Growth Rate Chart
This chart converts the absolute per-share figures into year-over-year percentage changes, making it easy to see whether growth is accelerating, decelerating, or reverting to trend — regardless of the company's absolute size.
Revenue per Share Growth (1-year, split-adjusted) measures how quickly the top line is expanding on a per-share basis. Sustained positive growth signals that the company continues to win customers and grow its addressable market.EPS Diluted Growth (1-year, split-adjusted) measures how quickly earnings are compounding for each shareholder. When EPS growth consistently outpaces revenue growth, operating leverage and margin expansion are at work.
Look for consistency, not just magnitude. A company that reliably grows EPS 10–15% per year is far more valuable than one that alternates between 50% spikes and deep contractions. Negative EPS growth during a period of positive revenue growth is a red flag — costs are rising faster than sales. Quarters where both lines converge near zero or go negative deserve close scrutiny.
How revenue converts to net income for the most recent annual period
Over the period Jan 2020 to Dec 2020, Consolidated Edison Inc converts approximately 94¢ of every revenue dollar into gross profit (gross margin: 93.5%).After accounting for operating expenses and taxes and expenses, the company retains 45.7% as net profit margin, resulting in $1.10B in net earnings.
Period Information
Report Type: Annual (10-K)
Period: Jan 2020 to Dec 2020
Analyzing long-term margin stability and competitive positioning
CONSOLIDATED EDISON INC's most recent trailing-twelve-month margins are elevated: gross margin has been stable near the low-90s (93.5% in 2020 vs. 92.9% in 2019). Operating margin shows a pronounced inflection between the two most recent annual points, moving from -244.4% in 2019 to 110.2% in 2020, and net margin rose to 45.7% in 2020. The most recent data therefore show high reported profitability across gross, operating and net measures.
Looking further back, margins were highly variable in the mid-2010s, with several quarters showing negative or very low gross and operating margins:
Earlier years also include strong gross margins (94.9% in 2013-12-31) and more moderate net margins (8.6% in 2013 and 2010). The most recent gross margin was 93.5%. The most recent operating margin was 110.2%. The most recent net profit margin was 45.7%.
Understanding Profit Margins
Between Jan 2020 and Dec 2020, Consolidated Edison Inc converts every dollar of revenue through the following stages:
Sustainable competitive advantages reveal themselves through consistently superior profit margins over extended periods. Companies with durable economic moats maintain pricing power and operational efficiency that competitors struggle to match.
A sign of durable competitive advantage is earning sustained higher margins than competitors.Look for margins that remain stable or improve over time, especially during economic downturns. Declining margins may signal increasing competition, pricing pressure, or deteriorating business fundamentals.
Comparing reported earnings to actual cash generation
Over the available history, CONSOLIDATED EDISON INC's trailing twelve‑month net income shows a downward move from peaks around $1.58B (period ending 2018-06-30) and $1.38B in late 2018/early 2019 to $1.10B in the most recent net income observation (period ending 2020-12-31). The net income series therefore records a notable inflection point in mid‑2018, followed by a gradual decline through 2020.
Operating cash flow (TTM) in the dataset is higher than net income at each overlapping date: cash flow was near $3.4B in 2016 (peaking around $3.42B) before falling to $2.69B by period end 2018. The operating cash flow series in the data ends at 2018-12-31, while net income continues to 2020-12-31, so the most recent reported TTM values are: Net Income TTM $1.10B (period ending 2020-12-31) and Operating Cash Flow TTM $2.69B (period ending 2018-12-31).
The Earnings vs. Cash Flow Gap
Reported earnings (Net Income) doesn't always reflect actual cash generation. Companies use accrual accounting, which recognizes revenue when earned and expenses when incurred—not when cash actually changes hands. This creates timing differences and opportunities for accounting discretion that can mask underlying business health.
Net Income (the "earnings" number) can be influenced by non-cash items like depreciation, stock-based compensation, and changes in accounting estimates.Operating Cash Flow, however, shows the actual cash the business generates from its core operations—a harder number to manipulate.
Trailing Twelve Months
What to Look For
Key Insight: Companies with durable competitive advantages typically show operating cash flow that meets or exceeds net income over time, demonstrating they convert accounting profits into actual cash that can be returned to shareholders or reinvested in the business.
Measuring management's efficiency at generating profits from shareholder capital
CONSOLIDATED EDISON INC's trailing twelve‑month Return on Equity has been uneven across the observations, showing periodic rises to around 10% and a peak of 13.2% in 2010, interspersed with several low points near or below 4%. The series shows notable inflection points with higher ROE readings in 2010 (13.2%), 2014 (10.2%) and 2018 (10.0%), and pronounced declines around 2012 (2.8%) and the most recent period.
More recent data show a downward move: ROE was 10.0% in 2018-03-31, 7.9% in 2019-03-31 and fell to 2.4% by 2020-12-31, the lowest value in the provided series. The most recent quarterly ROE was 2.4%.
The Gold Standard of Profitability
Return on Equity (ROE) is a powerful measure of how effectively a company's management is using the money shareholders have invested. Calculated by dividing Net Income by Shareholders' Equity, it reveals how much profit is generated for every dollar of equity capital.
A consistently high ROE (typically above 15-20%) is often the signature of a "quality" business with a durable competitive advantage. It indicates that the company can generate high returns on its own capital, which it can then reinvest at these high rates to compound value over time.
What to Look For:
How the company generates and deploys its cash
CONSOLIDATED EDISON INC's trailing twelve‑month operating cash flow shows a downward movement from $3.41B (periods around 2016) to $2.69B by the 2018 year‑end, reflecting a reduction in cash generated from operations over that interval. Over the same span, investing cash flow became more negative, moving from about -$4.69B in 2016 to -$5.47B at 2018 year‑end, indicating larger net cash outflows for investing activities in the most recent investing data points.
Financing cash flow has been more variable in the available history: it was around \$1.33B–\$1.65B in 2016, rose to \$2.94B at 2018 year‑end, fell to \$859.0M in 2019, and increased to \$2.25B in the most recent 2020 year‑end observation. The most recent Operating Cash Flow (TTM) was $2.69B, Investing Cash Flow (TTM) was -$5.47B, and Financing Cash Flow (TTM) was $2.25B.
Understanding Company Strategy
Capital allocation refers to how management decides to spend and invest the company's cash. Analyzing the three primary categories of cash flow reveals a company's true operational strategy:
What to look for: Is the company bootstrapping (funding growth solely from operating cash)? Are they borrowing to fund aggressive expansion or dividends? Or are they capital raising by issuing new shares, potentially diluting your ownership? A healthy, mature company typically generates strong operating cash, moderately invests in growth, and returns the surplus to shareholders through financing activities.
Trailing Twelve Months
Net assets attributable to each share — the accounting floor of intrinsic value
Why Book Value per Share Matters
Book value per share is the net worth of the company — total assets minus total liabilities — divided by shares outstanding (split-adjusted). It represents the theoretical liquidation value per share if every asset were sold and every liability repaid at balance-sheet carrying values. It is the accounting foundation upon which much of equity valuation is built.
A steadily rising book value per share is one of the most reliable signals of compounding wealth creation. It means the company is retaining earnings and building net worth faster than it is returning capital or eroding it. Warren Buffett famously tracked Berkshire Hathaway's book value per share for decades as his primary measure of intrinsic value growth.
Context is essential. Asset-heavy businesses (banks, manufacturers, utilities) should be judged by book value more directly than asset-light businesses (software, consumer brands), where intangible assets like intellectual property and customer loyalty may far exceed their balance-sheet carrying values. A company trading at a large premium to book value is not necessarily overvalued — it may simply possess competitive advantages that accounting rules do not capture. Conversely, a declining book value per share — especially over multiple years — is a serious warning sign of capital destruction.
How much of the company is financed by debt versus shareholders' equity
Reading the Debt-to-Equity Ratio
The debt-to-equity (D/E) ratio compares total financial debt to shareholders' equity. A ratio of 1.0 means the company has borrowed one dollar for every dollar of equity; a ratio of 2.0 means it has borrowed twice as much as it owns. Financial leverage amplifies both returns and risk: in good times, debt turbocharges equity returns; in bad times, it accelerates losses and can threaten solvency.
Trends matter more than a single number. A rising D/E ratio can mean the company is taking on debt to fund growth — potentially value-creating if returns exceed the cost of capital. But it can also mean equity is being eroded through losses or that the business is borrowing simply to sustain operations. A falling D/E ratio generally reflects strengthening financial health: earnings are being retained, debt maturities are being paid down, or both.
Industry norms vary enormously. Capital-intensive sectors (utilities, real estate, financials) routinely carry high D/E ratios that would be alarming in, say, a technology company. Always compare against sector peers. As a rough rule of thumb, a D/E above 2× in a cyclical business warrants careful scrutiny of interest coverage and refinancing risk.
Short-term liquidity — can the company cover its near-term obligations?
Liquidity: Can the Business Pay Its Bills?
The current ratio is calculated as current assets divided by current liabilities. A ratio of 1.5 means the company has $1.50 of short-term assets — cash, receivables, inventory — for every $1.00 of obligations due within the next twelve months. It is the most direct measure of near-term financial resilience: can the business meet its obligations without needing to raise new capital or sell long-term assets at a discount?
A ratio above 1.0 is generally healthy, meaning current assets exceed current liabilities. A ratio consistently above 2.0 may indicate the company is holding excess cash or inventory that could be deployed more productively. A ratio below 1.0 is a warning sign — the company is relying on future cash generation or external financing to cover its near-term obligations, which is manageable in normal conditions but dangerous during a downturn.
Trends and context matter.A declining current ratio isn't always alarming — highly efficient businesses (e.g., large retailers with reliable daily cash flows) often run leaner balance sheets intentionally. Conversely, a rapidly rising current ratio can signal slowing sales causing inventory to build, or customers taking longer to pay. Always compare the trend against industry peers and cross-reference with the cash flow statement to assess whether the business is genuinely liquid or just holding non-cash current assets.
How much the market is paying for each dollar of company earnings
CONSOLIDATED EDISON INC's trailing twelve-month P/E has shown a gradual recovery in recent quarters after several years of mid-to-high teens. The series rises from around 16.5x–18.6x in 2018 into the low 20s by 2019–2020, with the most recent observation at the end of 2020 above prior recent levels. Earlier periods show wider swings, including a peak near 23.6x in mid-2016 and a trough near 11.2x–12.5x in 2009–2010.
Most recent P/E ratio: 22.0x
What Is the PE Ratio?
The Price-to-Earnings (PE) ratio is one of the most widely used valuation metrics in investing. It divides the current stock price by the company's earnings per share (EPS), revealing how much investors are willing to pay for each dollar of earnings. A high PE can signal that the market expects strong future growth, while a low PE may suggest undervaluation—or reflect genuine concerns about the company's prospects.
Context matters:PE ratios vary significantly across industries. High-growth technology companies routinely trade at PE ratios above 30x or 40x, while mature, low-growth sectors like utilities or financials often trade closer to 10–15x. Always compare a company's PE to its own history and its industry peers, not just an absolute number.
What to Look For:
Key Insight:The PE ratio is a snapshot of market sentiment and expectations. Tracking it over time alongside earnings trends reveals whether the market's valuation has expanded or contracted—and whether that change is justified by fundamentals.