Stock Analysis | Consolidated Edison Outlook - A Technical and Fundamental Dilemma

Market Snapshot

Outlook: Negative - The technical side is weak, and it is suggested to avoid it. The stock is currently down by 3.65%, and market expectations remain neutral.

News Highlights

1. Tesla's Optimus Gets Praise from Nvidia's CEO: Nvidia CEO Jensen Huang highlighted Tesla's Optimus humanoid robot as a potential game-changer in the multi-trillion-dollar industry, though this news is more relevant to tech and robotics sectors.

2. HH Chemical Launches a New Bio-Based Materials Brand: The launch of HH Chemical’s BIODEX® is positioned to impact multiple industries, showcasing innovation in sustainable materials. Again, this does not directly affect Consolidated Edison’s core operations.

3. Virtus Investment Partners Reports AUM of $167.6 Billion: This update suggests ongoing confidence in asset management. While not directly linked to ED, it reflects market stability, which can influence utility stocks like ED.

Analyst Views & Fundamentals

Recent analyst ratings show a mixed bag. The simple average rating is 2.75, while the performance-weighted rating is 2.21, indicating that while the average expectation is slightly bearish, the historical performance of the analysts makes it even more cautious. Analysts from Barclays and Mizuho have rated the stock as "Sell" and "Buy" respectively, while Scotiabank gave a "Neutral" rating. This lack of consensus reflects uncertainty in the market.

The stock's fundamentals show mixed signals. Here are the key fundamentals and their respective internal diagnostic scores (0-10):

• Net profit attributable to parent company shareholders / Net profit: 100.00% (Score: 4.59)
• Equity multiplier: 3.01 (Score: 2.00)
• Price-to-Sales (PS): 8.51 (Score: 0.00)
• Net income to Revenue: -0.34% (Score: 3.00)
• Price-to-Earnings (PE): 124.31 (Score: 3.00)
• Gross Profit Margin (GPM): 50.76% (Score: 0.00)
• Gross Margin after Research (GMAR): 50.76% (Score: 1.00)
• Total profit YoY growth rate: 21.35% (Score: 2.00)
• Shareholders’ equity growth rate: 8.17% (Score: 0.00)
• Asset-MV: 1.23 (Score: 3.00)

While the net profit and total profit growth are strong indicators, the poor PS and GPM scores suggest financial leverage and margin concerns. This clashes with the current price trend of a 3.65% decline, indicating a possible overvaluation or investor skepticism.

Money-Flow Trends

Big-money and retail flows are both trending negatively in the last five days. The overall inflow ratio is 48.91%, which is below average. This suggests that both institutional and retail investors are either selling or holding back on ED, likely due to the bearish sentiment in the technical and fundamental indicators. The block inflow ratio is also 48.95%, reinforcing the trend that larger investors are moving out or cautious.

Key Technical Signals

The technical indicators for ED are not in favor of the stock. The internal diagnostic score is 3.48 out of 10, indicating weak technical health.

• Williams %R (WR) Oversold: This indicator has a score of 1.3, indicating very weak internal strength. It has occurred 59 times historically, with an average return of -0.61% and a win rate of 40.68%, which is below average.
• RSI Oversold: This has a slightly better score of 5.66, but the win rate is still just 55.56% with an average return of 0.45%. It has appeared 18 times historically.

Recent chart patterns also show WR Oversold as the dominant signal across five of the last five days. This suggests that while the stock may be oversold, the momentum is still weak. Key insights include a clear lack of bullish momentum and strong bearish signals, making it a poor short-term technical play.

Conclusion

Consolidated Edison is currently facing a mixed bag of signals. While some fundamentals like net profit and total profit growth look strong, the overall technical and market sentiment is bearish. Analysts are split, and money flows are trending away. Given the technical weakness and the mixed fundamental picture, it may be prudent to consider waiting for a clearer trend or a potential pullback before committing capital. Investors should monitor both earnings and market sentiment in the coming weeks for any signs of reversal.