After A 26% Slide, Edison Must Show Its Plan Survives The Wildfire Deadline

Edison International heads into its third-quarter report with a split personality. The operating business looked healthier last quarter than it had in years. Since then, the stock has fallen about 26% while the S&P 500 rose roughly 3%. The gap reflects a question that no quarterly earnings figure can settle: whether California produced a wildfire framework durable enough to keep Southern California Edison's capital plan financeable. The report after the close on October 29 is the first chance for management to explain, in its own words, where the company stands now that the August 31 legislative window has closed.

The headline numbers are set up to look soft. Consensus calls for EPS of $1.79, down 23.5% from $2.34 a year ago, on revenue of about $5.52 billion, a 4% decline. That is a tough comparison, not necessarily a sign of deterioration. A better test is the full-year arithmetic. Edison earned $2.97 in the first half and reaffirmed 2026 guidance of $5.90 to $6.20. The Street's $6.13 estimate sits near the top of that range and implies about $3.16 in second-half earnings. A third quarter near $1.79 would leave roughly $1.37 for the fourth quarter. Management cautioned last time that two strong quarters do not make a year. Even so, hitting consensus would keep the high end in play, and a beat could tempt the company to narrow the range upward. A miss, or any hint of leaning toward the midpoint, would undercut the improving momentum built in the first half.

The operating narrative from the prior call should be straightforward to validate. Woolsey securitization closed for about $2 billion, removing a source of interest expense that had weighed on results. Edison crossed the $1 billion Eaton settlement threshold, which triggered a pre-funding mechanism designed to keep SCE from paying out of pocket. Wildfire Recovery Compensation Program offers had climbed from around 590 to more than 2,200, worth over $775 million. Continued growth in that program, with no cash strain, would confirm the de-risking story. Two other items deserve watching. Management had softened its language on whether its equipment was associated with the Eaton fire, and it still has not provided an estimable loss range. The Los Angeles District Attorney's investigation also remains open.

The bigger issue is capital. Last quarter Edison filed a roughly $2.5 billion RAMP application that supports $8 billion to $9 billion of 2029 spending. It also touted load growth of up to 3% and new AI-driven efficiency targets. That runway underpins the 5% to 7% long-term growth target. However, management was unusually blunt that a framework that is not financeable could push the utilities toward downgrades. SCE sits at BBB-, with no investment-grade cushion. Management said such an outcome would shape how Edison prioritizes and deploys future capital. If the long-term growth rate and capital plan are reaffirmed without hedging, the selloff starts to look overdone. If rating-agency pressure, equity needs, or capital deferrals enter the conversation, the market's pessimism will look justified.

Sentiment has drifted more bearish, with 56.6% of readings negative versus 49.3% before the last report. At $56.53, the shares trade well below their 200-day moving average of $67.86. They sit closer to the post-report low of $51.10 than the high of $76.83, a range sharply lower than the prior quarter's $65 to $82 band. That sets a low bar for relief but offers little technical support if the news disappoints.

Ultimately, this quarter's EPS matters less than one answer. Investors need to know whether Edison still believes its balance sheet can fund the growth plan it laid out in July. Everything else is secondary.

This earnings preview was originally published on Earnings Whispers.

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