Edison International (EIX) Financial Statements

Edison International's financial health presents a dichotomy of strong profitability metrics against concerning cash flow and leverage. On the positive side, the company shows robust revenue growth of 30.8% YoY and a high operating margin of 36.7%, indicating effective cost control and pricing power within its regulated markets. The Return on Equity of 26.7% far exceeds the framework's high-quality threshold of 15-20%, suggesting efficient use of shareholder capital. However, the Quality Indicators reveal significant weaknesses. Most critically, the Free Cash Flow (FCF) Yield is negative at -2.6%, failing the framework's test for positive, growing FCF with a margin above 10-15%. This indicates the company is consuming, not generating, cash after capital expenditures, which is typical for capital-intensive utilities but a key quality differentiator. The balance sheet is also unfavourable, with a Debt-to-Equity ratio of 2.36, well above the framework's preference for low/zero debt (Debt/EBITDA < 1.0x). This high leverage increases financial risk, especially in a rising interest rate environment. The Growth Assessment is positive on trajectory with the 30.8% revenue increase, but the durability of this growth and its drivers relative to the moat are unclear from the provided data. Overall, the quality profile is split: strong on profitability and returns, but weak on cash generation and balance sheet strength. Analysis based on data as of 2024-05-15.