Edison International (EIX): A Bull Case Theory

We came across a bullish thesis on Edison International on Research Corner’s Substack by Qian Yuantian. In this article, we will summarize the bulls’ thesis on EIX. Edison International's share was trading at $58.89 as of November 28th. EIX’s trailing and forward P/E were 7.72 and 9.67 respectively according to Yahoo Finance.

Edison International, through its subsidiaries, engages in the generation and distribution of electric power. EIX presents an attractive buying opportunity following a steep share price decline triggered by investor fears over potential liabilities from the Eaton Fire. Despite a 37% sell-off, the market reaction appears excessive given the company’s durable regulated-utility model, predictable earnings base, and substantial financial protections unique to California’s regulatory framework.

EIX operates primarily through Southern California Edison (SCE), one of the nation’s largest regulated electric utilities, earning returns through CPUC-approved rate base investments rather than volumetric electricity sales. With a 10.33% authorized ROE—among the highest in the industry—SCE’s long-term visibility is anchored by multi-year general rate case decisions supporting grid modernization, wildfire mitigation, and clean energy infrastructure.

While customer growth is limited, California’s robust commercial economy, electrification push, and rapidly increasing power demand reinforce sustained capital deployment, driving management’s 5–7% EPS growth outlook and supporting decades-long dividend expansion.

Concerns over wildfire liabilities, a recurring issue for California utilities, remain the primary overhang. However, EIX benefits from the state’s Wildfire Fund—a $21 billion liquidity mechanism that caps SCE’s exposure, limiting Eaton Fire liabilities to $3.9 billion, fully recoverable through the fund. Historical precedent shows share prices rebound once liability pathways become clear, and SCE’s long-standing pattern of cost recovery, safety certification maintenance, and regulatory alignment supports this view. Though leverage has risen, the company’s financial posture remains manageable relative to peers, with nearly all CapEx feeding rate-base growth.

Given the company’s defensive monopoly economics, strong regulatory tailwinds, wildfire backstops, and meaningful undervaluation, the stock offers compelling risk-adjusted upside. With an implied value of $79.11—43.1% above current levels—EIX presents a mispriced, sentiment-driven opportunity poised for recovery as liabilities are clarified and investor confidence normalizes.

Previously we covered a bullish thesis on Evergy, Inc. (EVRG) by Hidden Market Gems in April 2025, which highlighted the company’s defensive utility profile, resilient earnings base, and appeal during macro volatility. The company’s stock price has appreciated approximately by 19.14% since our coverage. This is because the thesis played out. The thesis still stands as its stability remains attractive. Qian Yuantian shares a similar view but emphasizes EIX’s regulatory protections and wildfire backstops.

Edison International is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 42 hedge fund portfolios held EIX at the end of the second quarter which was 44 in the previous quarter. While we acknowledge the potential of EIX as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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Disclosure: None.