Edison International Maintains Asset Appreciation, Gains Nearly 30% Year-To-Date (NYSE:EIX)

Ned Piplovic

Edison International

After dropping significantly in mid-November 2018, the Edison International (NYSE:EIX) share price embarked on a steep recovery trend, delivered capital gains of nearly 30% since the beginning of 2019 and more than 50% since the 52-week low last November.

Edison International’s share price took a hit and began weakening after the company was named as a plaintiff in a lawsuit. The law suit alleged that Edison International’s Southern California Edison subsidiary bore at least dome responsibility for the Woolsey Fire. The fire destroyed more than 1,600 mostly residential buildings and burned nearly 100,000 acres of land in early November 2018.

The share price dropped for two consecutive trading sessions following the lawsuit announcement to close the trading week with a decline of more than 20%. Additionally, the share price continued its pullback into the following week trading down during two of the first three trading sessions that week.

Those five trading sessions combined for a total share price decline of more than 30%. The overall markets and most other equities experienced a correction in late 2018 and most of that correction occurred in December. However, because of its mid-November drop, the Edison International stock rose relatively steadily after the November low while the rest of the equities declined.

Despite fears of lawsuit consequences and a share price drop, Edison International still managed to deliver to its shareholders positive financial results for the end of the year. After missing analysts’ earnings estimates in the first quarter, the company came back and beat earnings expectations for the second quarter of 2019 by a significant margin.

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In addition to steady asset appreciation, Edison International also rewarded its shareholders with a reliable stream of dividend income distributions. The combined asset appreciation and dividend payouts delivered nearly double-digit-percentage total returns over the past 12 months despite the November share price drop.

The moving averages suggest that the current share price uptrend might continue, at least in the near future. The November share price drop pushed the 50-day moving average below the 200-day average. However, the recovering share price lifted the 50-day moving average back to 200-day average levels and pushed the 50-day average above the 200-day counterpart by the beginning of July 2019. Since breaking above the 200-day average in a bullish manner, the 50-day moving average has risen to 13.4% above its 200-day equivalent and continues rising.

 

Financial Results

On July 25, 2019, Edison International reported second-quarter 2019 net income of $392 million, which was 40% higher than the $276 million from the same period last year. Net income per share rose from $0.85 last year to the current $1.20 figure.

Adjusted earnings advanced 87% year-over-year to $515 million from $274 million last year. On a per diluted share basis, the $1.58 adjusted earnings figure for second-quarter 2019 was 85% higher than the $0.85 figure from last year. Additionally, the second-quarter results beat Wall Street analysts’ expectations of $1.13 by nearly 40%.

 

Dividends

Edison International’s current $0.6125 quarterly dividend is 1.24% higher than the $0.605 payout from the same period last year. This new payout is equivalent to a $2.45 annualized  distribution and yields 3.4%, which is 14% higher than the company’s own 2.96% five-year yield average. Additionally, the Edison International current yield outperformed the 1.95% average yield of the overall Utilities sector by 73%, as well as the 2.03% average yield of the company’s  peers in the Electric Utilities industry segment by 66%.

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Despite a history of more than a century of dividends distributions, Edison International encountered a severe financial downturn and was forced to eliminate dividends in 2001. However, Edison International reintroduced dividend distributions in 2004 and has boosted its annual dividend amount every year since then. Since resuming dividend distributions in 2004, the company tripled its dividend amount, which corresponds to an average growth rate of 7.7% per year.

 

Edison International

Share Price

After the November drop, the share price reached its 52-week low of $47.19 on November 15, 2018, for a total decline of 31% since the beginning of the trailing 12-month period. However, after reversing direction, the share price advanced steadily with just a minor pause in May 2019. The share price continued advancing until it reached its 52-week high of $75.12 on August 8, 2019, for a total gain of nearly 60% over the 52-week low in mid-November 2018.

Since peaking in early August, the share price pulled back 3.4% to close on September 12, 2019, at $72.54. While slightly off its 52-week high, this closing price was 6% higher than it was one year earlier, 53.7% above the 52-week low and 25% higher than it was five years ago.

Even with all the turmoil, the share price growth and dividend distributions combined to deliver a 9.6% total return over the trailing 12-months. Share price fluctuations and a significant pullback in early 2018 limited the three-year total return to just 10%. However, the total return over the last five years was significantly better at 47%.

 

Edison International (NYSE: EIX)

Based in Rosemead, California, and founded in 1886, Edison International generates, transmits and distributes electric power, with its operations being based through two divisions. Southern California Edison (SCE) is one of the nation’s largest investor-owned utilities, and the company’s service area includes approximately 430 cities and more than 50,000 square miles in central, coastal and southern California. Through more than five million residential and commercial accounts, the company provides electric power to approximately 15 million people, more than the entire population of Pennsylvania — the fifth most populous state in the United States. The other division, Edison Energy, is based out of Irvine, California, and is an independent advisory and service company for commercial and industrial energy users. Edison Energy helps companies reduce energy costs, improve environmental performance, ensure energy resiliency and manage exposure to energy price risk.

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Ned-Piplovic

Ned Piplovic is the assistant editor of website content at Eagle Financial Publications. He graduated from Columbia University with a Bachelor’s degree in Economics and Philosophy. Prior to joining Eagle, Ned spent 15 years in corporate operations and financial management. Ned writes for www.DividendInvestor.com and www.StockInvestor.com.

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