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Consolidated Edison (ED) Repurchases Common Shares Worth $1B

Consolidated Edison, Inc. ED recently announced the repurchase of $1 billion of its common shares as a part of accelerated share repurchase agreements. The company announced the agreement with mainly two dealers from whom it will receive 8.7 million shares of Con Edison common shares against the payment of $1 billion on Mar 7, 2023.

The company intends to fund the transaction by using the proceeds from selling its Con Edison Clean Energy Businesses. Consolidated Edison expects to reach the final completion of the transaction within the third quarter of 2023.

In Oct 2022, Consolidated Edison inked a purchase and sale agreement with RWE Renewables America involving the sale of Clean Energy Businesses to the latter for $6.8 billion. In this context, it is imperative to mention that Consolidated Edison announced that it intends to use the transaction’s proceeds to fund its various capital needs, including the share repurchases. The company intended to repurchase up to $1,000 million of its common shares by using a portion of the proceeds from the sale transaction.

Can Consolidated Edison Sustain Such Buybacks?

Share buyback activity by a company is generally backed by strong operational performance and strength in financial position. ED’s total revenue increased 18% year-over-year in the last reported quarter, thus highlighting the strong top-line growth of the company.

Its cash and temporary cash investments as of Dec 31, 2022, were $1,282 million compared with $992 million as of Dec 31, 2021. On the other hand, its cash from operating activities amounted to $3,935 million compared with the $2,733 million generated in the year-ago period. Such improved growth in numbers indicates a strong cash flow position to distribute cash to shareholders.

The company expects earnings per share in the range of $4.75-$4.95 for 2023. This entails a 6.1% improvement from the prior-year reported figure of $4.57 per share at the midpoint.

In light of the aforementioned factors, one may safely conclude that ED may continue to reward shareholders through share buyback and dividends.

Utilities Raise Shareholders’ Value

Utility companies’ regulated operations and business structure ensure a stable inflow of income. Backed by consistent performance, companies in the utility space often undertake shareholder-friendly moves. In this context, ED apart, other utilities that have rewarded shareholders with either dividends or share buyback activity are:

In Feb 2023, CMS Energy Corporation CMS announced that its board of directors approved a hike in its quarterly dividend to 48.75 cents per share, reflecting an increase of 6% from the prior payout.

The long-term (three-five years) earnings growth rate of CMS is 7.9%. The Zacks Consensus Estimate for 2023 earnings suggests a growth rate of 7.6% from the prior-year reported figure.

In Feb 2023, Hawaiian Electric Industries’ HE board of directors approved a hike in its quarterly dividend to 36 cents per share, reflecting an increase of 2.9% from the prior payout.

Hawaiian Electric boasts a long-term earnings growth rate of 3.1%. The Zacks Consensus Estimate for HE’s 2023 earnings suggests a growth rate of 1.8% from the prior-year reported figure.

In the same month,Ameren Corporation’s AEE board of directors approved a hike in its quarterly dividend to 63 cents per share, reflecting an increase of 7% from the prior payout.

Ameren’s long-term earnings growth rate is pegged at 6.9%. The Zacks Consensus Estimate for AEE’s 2023 earnings suggests a growth rate of 5.1% from the prior-year reported figure.

Price Movement

In the past year, Consolidated Edison shares have increased 2.5% against the industry’s declineof 8.4%.

Zacks Investment Research
Zacks Investment Research


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Zacks Rank

Consolidated Edison currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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Ameren Corporation (AEE) : Free Stock Analysis Report

Consolidated Edison Inc (ED) : Free Stock Analysis Report

CMS Energy Corporation (CMS) : Free Stock Analysis Report

Hawaiian Electric Industries, Inc. (HE) : Free Stock Analysis Report

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