Is Consolidated Edison a Good Investment?

PHOTO CREDIT: Consolidated Edison

OVERVIEW

Consolidated Edison Incorporation is a company that offers electricity and gas services to consumers around the North-Eastern part of the United States. The company offers these services to over 4 million customers in New York and New Jersey. They also operate thousands of miles of distribution wires and gas lines, thousands of transformers, and hundreds of electric and gas infrastructures to supply these commodities.

Why You Should?

  1. Consolidated Energy is a good reopening play as the economy starts to reopen again. This is because more energy will be consumed as large sporting events, restaurants, and factories reopen again. This will benefit the company’s future growth and will also benefit its investors.
  2. Consolidated Energy is a fairly safe and recession-proof investment. The products and services that it offers are essential to maintain a high quality of life as it powers everything from your stove to the lights in your house. This will keep the sales of Consolidated Edison stable during tough economic times.
  3. Consolidated Edison serves over 4 million customers in New York and New Jersey. These customers will most likely continue their business with Consolidated Edison and will not stop due to the essential nature of their products. This wide range of customers will benefit the company in the future.
  4. Consolidated Edison has seen rising revenues and stable profits over the past couple of financial years due to the reasons mentioned above. This will benefit the company’s future growth in the electricity and gas industry because they can increase their spending on infrastructure projects. This will benefit investors as well. In the financial year of 2019, the company reported revenues of around 12.6 billion and profits of around 1.34 billion. In the financial year of 2018, the company reported lower revenues of around 12.34 billion but marginally higher profits of around 1.38 billion.
PHOTO CREDIT: Yahoo Finance

Why You Should Not?

  1. The COVID-19 Pandemic has caused a drop in demand for electricity and gas demand for large commercial and enterprise customers, including the likes of sporting stadiums, restaurants, and schools. All of this has hurt the company’s financial results, though the sales have been stable.
  2. Consolidated Edison signs contracts with cities and districts to offer their services to that city’s citizens. However, they can still lose these contracts to other competitors like Duke Energy, Southern Company, and many others. Though there isn’t too much competition in this industry, Consolidated Edison needs to keep its services at high levels in order to maintain contracts.

MY OPINION

In my opinion, I think that Consolidated Edison is a good investment because it is a good reopening play, a safe investment, the wide range and amount of customers that it serves, as well as rising revenues and profits. However, competition and impacts from the pandemic have negatively impacted the company.

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Aaditya Patel is a writer who publishes analysis on companies publicly traded on the NYSE. Follow him @the_investing787 on Instagram for summary posts.

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Aaditya Patel

Aaditya Patel

Aaditya Patel is a writer who publishes analysis on companies publicly traded on the NYSE. Follow him @the_investing787 on Instagram for summary posts.

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