Earnings call transcript: Edison International Q2 2025 misses EPS forecast

Edison International reported Q2 2025 EPS of $0.97, missing the $1.28 forecast by 24.22%, though revenue of $4.54 billion surpassed expectations by 2.25%. Despite a minor 0.29% aftermarket stock decline reflecting the earnings miss, the company reaffirmed its 2025 EPS guidance and 5-7% core EPS CAGR through 2028, emphasizing ongoing investments in infrastructure and wildfire mitigation amid regulatory uncertainties surrounding its 2025 General Rate Case and the AB 1054 framework.

Analysis

Edison International (EIX) reported a mixed second quarter for 2025, characterized by a significant earnings per share miss but a modest revenue beat. The company posted an EPS of $0.97, falling 24.22% short of the $1.28 consensus forecast, while revenue reached $4.54 billion, exceeding expectations by 2.25%. The market reaction was muted, with a slight 0.29% aftermarket stock decline, suggesting investors are weighing the EPS miss against the company's confident forward guidance. Management reaffirmed its 2025 EPS guidance and a 5-7% core EPS compound annual growth rate through 2028, attributing the current quarter's poor year-over-year comparison to the delayed final decision in its 2025 General Rate Case (GRC). The proposed GRC decision would authorize $9.8 billion in base revenue, which management notes is generally in line with their forecasts, though they are pushing for revisions to increase targeted undergrounding for wildfire mitigation. Key overhangs remain the ongoing investigation into the Eaton Fire, for which the company has launched a compensation program, and legislative uncertainty surrounding California's AB 1054 wildfire framework. Despite these risks and a significant debt load, the company trades at a low P/E of 7.33 and offers a 6.35% dividend yield, which it has maintained for 22 consecutive years, signaling potential value contingent on favorable regulatory outcomes.

Key Decisions for Investors

• Investors should weigh the stock's value proposition, highlighted by a 6.35% dividend yield and a low 7.33 P/E ratio, against the substantial regulatory and litigation risks tied to California's wildfire environment and legislative actions.
• The primary catalysts to monitor are the final decision on the 2025 General Rate Case (GRC) and any legislative updates to the AB 1054 framework, as these will directly impact the company's financial outlook and trigger a guidance refresh.
• Despite the Q2 EPS miss, the reaffirmed long-term 5-7% EPS CAGR guidance suggests management's confidence in its growth trajectory, making EIX a potential consideration for long-term, risk-tolerant investors focused on utility modernization and electrification trends.
• Monitor developments from the Eaton Fire investigation and the newly launched compensation program, as the ultimate financial liability could impact the stability of the state's wildfire fund and EIX's balance sheet.