While utility stocks like Consolidated Edison (ED) are often characterized by stability, the company's recent first-quarter 2025 report highlighted a significant dynamic: a remarkable +67.63% surge in net cash provided by operating activities compared to the previous fiscal year. This jump in operational cash generation provides a compelling starting point for understanding the fundamental health and strategic flexibility of this major regulated utility, underpinning its ability to fund capital-intensive projects and maintain its long-standing dividend tradition.
This substantial increase in operating cash flow is particularly noteworthy in the context of the utility sector's ongoing transformation, driven by grid modernization, renewable energy integration, and increasing electrification demands. For a company with a market capitalization of $36.6 billion, such a strong cash flow performance is more than just a quarterly anomaly; it reflects operational efficiency and potentially favorable working capital movements that are critical for supporting its extensive infrastructure investment program and navigating the complex regulatory landscape in its service territories, primarily New York City and Westchester County.
Recent Financial Performance and Key Drivers#
Consolidated Edison's first quarter of 2025 saw the company report net income that translated to an earnings per share (EPS) of $2.26, exceeding the consensus analyst estimate of $2.21. This earnings beat, while modest, underscores the company's ability to perform consistently against expectations in a highly regulated environment. Looking at the full fiscal year 2024 results, which underpin the current TTM (Trailing Twelve Months) metrics, the company reported revenue of $15.26 billion, a +4.04% increase from $14.66 billion in 2023. However, net income saw a notable decrease, falling to $1.82 billion in 2024 from $2.52 billion in 2023, representing a -27.75% decline. This divergence between revenue growth and net income contraction warrants closer examination.
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The decrease in net income year-over-year appears to be influenced by changes in operating expenses and income before tax. While gross profit increased from $7.41 billion in 2023 to $8.17 billion in 2024, operating income decreased from $3.20 billion to $2.67 billion. This suggests that while the cost of revenue saw a favorable shift (decreasing from $7.26 billion to $7.09 billion), operating expenses saw an increase, rising from $4.21 billion in 2023 to $5.50 billion in 2024. The resulting compression in operating margin, from 21.8% in 2023 to 17.5% in 2024, played a significant role in the lower net income, alongside a decrease in income before tax from $3.00 billion to $2.14 billion. The net income margin consequently fell from 17.18% to 11.93% over the same period, according to data from Monexa AI.
Despite the year-over-year net income decline in 2024 compared to 2023, it is crucial to view this within a broader historical context. Comparing 2024 results to 2022 and 2021 provides a more nuanced picture. Revenue in 2024 ($15.26 billion) was below the 2022 level ($15.67 billion) but above 2021 ($13.68 billion). Net income in 2024 ($1.82 billion) was significantly higher than 2022 ($1.66 billion) and 2021 ($1.35 billion). This suggests that while 2023 represented a peak in recent net income performance, the 2024 results indicate a return to profitability levels more in line with, or slightly above, the trend from 2021 and 2022. The 3-year CAGR for net income still stands at a healthy +10.58%, reflecting strong growth over the 2021-2024 period despite the 2023-2024 dip.
Key Financial Performance Metrics#
| Metric | FY 2021 | FY 2022 | FY 2023 | FY 2024 |
|---|---|---|---|---|
| Revenue | $13.68B | $15.67B | $14.66B | $15.26B |
| Net Income | $1.35B | $1.66B | $2.52B | $1.82B |
| Operating Income | $2.83B | $2.62B | $3.20B | $2.67B |
| Operating Margin | 20.66% | 16.75% | 21.80% | 17.50% |
| Net Income Margin | 9.84% | 10.59% | 17.18% | 11.93% |
| Net Cash from Operations | $2.73B | $3.94B | $2.16B | $3.61B |
| Free Cash Flow | -$1.22B | -$233MM | -$2.34B | -$1.16B |
Source: Monexa AI
Cash Flow Dynamics and Capital Allocation#
The standout figure from the recent data is the +67.63% year-over-year growth in net cash provided by operating activities, reaching $3.61 billion in 2024 compared to $2.16 billion in 2023. This rebound brings operating cash flow closer to the $3.94 billion generated in 2022. The factors driving such a significant swing in operational cash flow can be complex for a utility, often involving changes in regulatory assets and liabilities, timing of collections and payments, and working capital movements. While the detailed breakdown of this increase wasn't provided in the summary data, the overall strength is a positive signal for the company's ability to fund its operations and investments internally.
Despite the strong operating cash flow, Consolidated Edison continues to report negative free cash flow. Free cash flow (FCF) was -$1.16 billion in 2024, an improvement from -$2.34 billion in 2023, but still negative. This is a common characteristic of capital-intensive utility companies that are heavily investing in infrastructure upgrades, grid modernization, and clean energy transitions. The significant capital expenditures required to maintain and enhance their vast asset bases often exceed the cash generated from operations, resulting in negative FCF. The provided data shows investments in property, plant, and equipment were substantial in recent years (-$4.49 billion in 2023, -$4.17 billion in 2022, -$3.95 billion in 2021). The negative FCF reflects this ongoing need for significant capital deployment, which is essential for future rate base growth and earnings potential.
The company's balance sheet reflects this capital intensity. Total assets grew from $66.33 billion in 2023 to $70.56 billion in 2024, driven primarily by an increase in property, plant, and equipment (net), which rose from $50.14 billion to $52.66 billion. This asset growth is funded through a combination of operating cash flow, debt, and equity. Total debt increased from $25.01 billion in 2023 to $27.82 billion in 2024. The net debt to EBITDA ratio stands at 4.57x (TTM), which is a key metric for assessing a utility's leverage relative to its operating cash flow generation capacity. While this ratio indicates a reliance on debt financing, it is within a range often seen in the capital-intensive utility sector, which benefits from stable, regulated earnings streams that can support higher debt levels than many other industries.
Dividend Policy and Shareholder Returns#
Consolidated Edison has long been recognized for its consistent dividend payments, a key attraction for income-focused investors. The company recently declared a quarterly dividend of $0.85 per share, payable on June 16, 2025, following a record date of May 14, 2025. This follows a previous declaration of the same amount payable in March 2025, and an increase from the $0.83 per share paid in the latter half of 2024. The current annualized dividend of $3.40 per share (based on the latest declaration) results in a dividend yield of approximately 3.3% based on the current stock price of $101.59. The dividend payout ratio, calculated based on TTM EPS of $5.41, stands at approximately 58.59%. This payout ratio is within a healthy range for a utility, balancing returning capital to shareholders with retaining earnings for reinvestment in the business.
Con Edison has a strong track record of dividend growth, although the provided data indicates a 0% 5-year dividend growth rate, which might reflect a period of slower increases or specific adjustments within that timeframe. However, the recent increase from $0.83 to $0.85 per quarter signals a resumption or continuation of modest growth. The sustainability of the dividend is supported by the company's regulated earnings base, consistent operating cash flow generation (especially the recent surge), and a payout ratio that leaves room for reinvestment. While negative free cash flow necessitates external financing for capital projects, the stability of regulated earnings provides confidence in the company's ability to meet its dividend obligations.
Recent Dividends and Payout Ratios#
| Declaration Date | Record Date | Payment Date | Dividend Per Share |
|---|---|---|---|
| 2025-04-17 | 2025-05-14 | 2025-06-16 | $0.85 |
| 2025-01-16 | 2025-02-19 | 2025-03-14 | $0.85 |
| 2024-10-17 | 2024-11-13 | 2024-12-16 | $0.83 |
| 2024-07-18 | 2024-08-14 | 2024-09-16 | $0.83 |
Source: Monexa AI Dividend History
Strategic Initiatives and Industry Context#
Consolidated Edison's strategy is intrinsically linked to the evolving dynamics of the electric utility industry. Key trends include increasing electricity demand driven by population growth and electrification (e.g., electric vehicles, building heating/cooling), the integration of renewable energy sources like solar and wind, and the need for significant investment in grid modernization to enhance reliability, resilience, and accommodate distributed energy resources. Analyst estimates project future revenue growth for ED with a CAGR of +3.35% and EPS growth with a CAGR of +5.94% through 2029, according to Monexa AI data. These projections align with broader industry expectations for steady, albeit moderate, growth in the regulated utility sector.
The company's substantial capital expenditures, reflected in the negative free cash flow, are the operational manifestation of this strategy. Investments in property, plant, and equipment are necessary to upgrade aging infrastructure, build out transmission and distribution networks to handle increased load and integrate renewables, and implement smart grid technologies. These investments, when approved by regulators, expand the company's rate base, which is the asset base upon which it is allowed to earn a regulated return. This regulatory framework provides a degree of earnings stability and predictability, which is a core characteristic of the utility business model.
Management's attendance at financial conferences in May and June 2025, as reported by PR Newswire, highlights the importance of communicating these strategic priorities and their financial implications to the investment community. Discussions likely center on ongoing capital projects, the regulatory rate case process (which determines allowed returns on investments), and the company's role in supporting New York's clean energy goals. Effective communication on these fronts is crucial for maintaining investor confidence and ensuring access to the capital markets needed to fund its investment programs.
Market Reaction and Valuation#
Consolidated Edison's stock (ED) is currently trading at $101.59, experiencing a slight daily decrease of -0.61%. The stock's performance is influenced by broader market conditions, interest rate expectations (as utility stocks are often seen as bond proxies), and company-specific news like earnings results and regulatory developments. The company's market capitalization stands at approximately $36.60 billion.
Valuation metrics provide insight into how the market is pricing ED relative to its fundamentals. The TTM PE ratio is 18.78x. Looking ahead, the forward PE ratio for 2025 is estimated at 18.73x, decreasing to 17.47x for 2026 and 16.58x for 2027 based on analyst estimates. The Enterprise Value to EBITDA (EV/EBITDA) ratio, another commonly used metric for utilities, is 11.05x (TTM). Forward EV/EBITDA estimates are 10.88x for 2025, 10.47x for 2026, and 10.03x for 2027. These forward multiples, showing a gradual decrease, suggest that analysts anticipate continued earnings and EBITDA growth, which could make the stock appear more attractive on a forward basis if these estimates are realized.
Comparing these metrics to historical levels and industry peers is essential for a complete valuation assessment. While not provided in the current data, regulated utilities typically trade at valuation multiples that reflect their stable, predictable earnings streams and capital intensity. The current forward P/E and EV/EBITDA ratios appear broadly in line with what might be expected for a large, established utility in a high-cost, high-demand service territory like New York. The Price to Sales ratio is 2.32x, and the Price to Book ratio is 1.5x, providing additional perspectives on the market's valuation relative to the company's revenue and book value of equity.
Financial Health and Management Execution#
Consolidated Edison's balance sheet indicates a stable financial position. The current ratio stands at 1.28x (TTM), suggesting the company has sufficient liquid assets to cover its short-term liabilities. The debt-to-equity ratio is approximately 1.1x, or 110.23% (TTM). While this indicates a significant reliance on debt, it is common and often necessary for utilities given their massive infrastructure investments. The key is the ability to service this debt, which is supported by stable, regulated cash flows. The net debt to EBITDA ratio of 4.57x provides a measure of how many years of EBITDA would be needed to pay off net debt, offering another perspective on leverage relative to earnings capacity.
Evaluating management execution involves assessing their ability to navigate the regulatory environment, execute on capital projects efficiently, control operating costs, and deliver consistent financial results. The Q1 2025 earnings beat and the substantial operating cash flow increase suggest effective operational management in the near term. The decline in net income and operating margin in 2024 compared to 2023 warrants scrutiny regarding cost control or specific operational/regulatory factors during that period, although the comparison to earlier years (2021-2022) indicates 2024 performance was not an outlier relative to a longer trend. Management's focus on communicating their strategy and capital plans at investor conferences is a positive sign of proactive engagement.
Historically, utilities like ED operate under regulatory frameworks that dictate their allowed rates and returns. Management's success is often judged by their ability to secure favorable rate case outcomes that support necessary capital investments while providing a reasonable return to shareholders. The consistent dividend history, including the recent increase, reflects management's commitment to returning value to shareholders while continuing to invest in the business. The ability to generate strong operating cash flow, even amidst significant capital spending, is a testament to the operational effectiveness required in managing a complex utility infrastructure.
Conclusion: Implications for Investors#
Consolidated Edison's recent performance, highlighted by its Q1 2025 earnings exceeding estimates and a significant surge in operating cash flow in 2024, paints a picture of a resilient regulated utility effectively managing its operations in a dynamic industry. While the year-over-year decline in net income from 2023 to 2024 requires context within the multi-year trend and operational expense increases, the overall financial health, supported by a solid balance sheet and healthy current ratio, remains intact.
The company's commitment to its dividend, evidenced by the recent declaration and attractive yield of approximately 3.3%, continues to make it a relevant consideration for income-seeking investors. The sustainability of this dividend is underpinned by stable regulated earnings and the strong operating cash flow generation, even as the company continues to invest heavily in infrastructure and clean energy initiatives, resulting in negative free cash flow.
Looking ahead, ED's strategic positioning within the growing electric utility sector, driven by electrification and renewable integration trends, provides a clear path for future rate base growth and earnings potential, as reflected in analyst projections for modest revenue and EPS CAGRs. However, investors should continue to monitor the regulatory environment, capital expenditure efficiency, and the company's ability to manage operating costs effectively. Management's active engagement with the investment community at upcoming conferences offers opportunities for further clarity on these key areas, reinforcing transparency and supporting informed decision-making.