Overview Edison International is a regulated electric utility serving Southern California with large, recurring revenue streams and a cash-generative but margin-volatile financial profile. Financial Strengths The company’s cash-generation quality is a notable strength: trailing twelve‑month operating cash flow was $3.25B versus net income of $1.61B , and the cash conversion ratio averaged about 2.
Edison International is a regulated electric utility serving Southern California with large, recurring revenue streams and a cash-generative but margin-volatile financial profile.
The company’s cash-generation quality is a notable strength: trailing twelve‑month operating cash flow was $3.25B versus net income of $1.61B, and the cash conversion ratio averaged about 2.01x, indicating reported earnings have been converted to cash at better than a 2:1 rate. Gross margin remains high relative to many sectors at 61.9% (2016), and the market multiple has compressed to a trailing P/E of 13.4x (2014 TTM), down from 16.7x a year earlier, which has materially reduced the earnings multiple investors are attributing to the business. Revenue per share has shown modest stability with a recent 1‑year growth of 3.0% and a latest level of $35.99 per share (2016).
There are important areas of concern. Liquidity metrics are weak: the current ratio is 0.4876, meaning current liabilities exceed current assets by a substantial margin. Operating profitability shows a sharp deterioration on the available-margin series, with operating margin swinging to -20.5% in 2016 after being 66.8% in 2015, indicating a large operating loss on the most recent annual point. Operating cash flow has also trended lower from $3.91B (2011 TTM) to $3.25B (2014 TTM), and financing cash flow shifted from net inflows (e.g., $645M in 2014) to a net outflow of -$588M (2015 TTM), highlighting recent capital structure and cash deployment shifts.
The foundation of business quality and long-term value creation
EDISON INTERNATIONAL's most recent quarter (period ending 2025-06-30) shows revenue of $4.17B and net income of $343.0M. Recent data is limited to that quarter in the provided set, so the commentary focuses on that latest observation as the primary indicator of current performance.
The most recent quarterly revenue was $4.17B. The most recent quarterly net income was $343.0M.
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
Period Information
Report Type: Annual (10-K)
Period: Jan 2016 to Dec 2016
Analyzing long-term margin stability and competitive positioning
EDISON INTERNATIONAL's gross margin in the most recent reported year (2016) was 61.9%, down slightly from 63.0% in 2015 and well below the roughly 76% levels reported in 2010–2011 (76.4% in 2010, 76.6% in 2011).
The series shows a clear multi-year decline in gross margin, with the most recent year showing a modest reduction versus the prior year.
Operating margin exhibits a pronounced inflection: it was 66.8% in 2015 and fell to -20.5% in 2016, a large swing into negative operating profitability in the latest period.
Net profit margin is only available for 2013 at 7.3% in this dataset and cannot be trended beyond that single point.
The most recent observed values are:
Understanding Profit Margins
Between Jan 2016 and Dec 2016, Edison International 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
EDISON INTERNATIONAL's most recent trailing‑twelve‑month data (period ending 2014‑12‑31) show operating cash flow of $3.25B versus net income of $1.61B, with operating cash flow exceeding reported earnings. Net income increased from $915.0M in the 2013 TTM to $1.61B in the 2014 TTM, while operating cash flow in the available history declined from $3.91B (2011 TTM) to $3.25B (2014 TTM).
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.
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
The chart for EDISON INTERNATIONAL shows a single reported quarterly Return on Equity (ROE) observation with a period ending 2014-12-31. With only one data point available, no trend or inflection points can be identified from the chart.
The latest reported trailing twelve-month ROE for EDISON INTERNATIONAL was 12.4% as of 2014-12-31.
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
EDISON INTERNATIONAL's financing cash flow shows a clear inflection in the most recent data: financing was a net cash inflow in 2013 ($581.0M) and 2014 ($645.0M) but turned to a significant net outflow by the 2015–12–31 TTM observation (–$588.0M). The shift from consecutive positive financing TTM figures to a sizable negative TTM financing amount is the most notable recent change in the chart.
Operating cash flow TTM is lower in the latest available operating-period comparison: it was $3.91B at 2011–12–31 and $3.25B at 2014–12–31, indicating a decline over that span with the most recent operating TTM shown at $3.25B.
Investing cash flow TTM values are not included in the provided dataset.
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.
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
EDISON INTERNATIONAL’s trailing twelve-month price-to-earnings ratio declined year-over-year, moving from 16.7x at the 2013 year end to 13.4x at the 2014 year end. This represents a clear contraction in the company’s P/E over the most recent annual observation.
The key inflection is the drop between the two reported year-end points; the most recent reported level is 13.4x. The most recent Price-to-Earnings ratio was 13.4x.
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.