NEW YORK (TheStreet) -- Shares of Consolidated Edison (ED) are declining, lower by 0.84% to $62.50 in pre-market trading on Wednesday, after the electric utilities company was downgraded to "sell" from "neutral" by analysts at UBS this morning.
Analysts at the firm cited the recent outperformance of Con Edison shares, and maintained its price target of $59.
UBS analysts added that, "the potential near-term pressure on earnings power that could move the company's return-on-equity is below 9%."
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New York City-based Con Edison is a holding company which owns Consolidated Edison Co. of New York, Inc. and Orange and Rockland Utilities, Inc., providing electricity, natural gas and steam to customers primarily in New York, New Jersey, and Pennsylvania.
Separately, TheStreet Ratings team rates CONSOLIDATED EDISON INC as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:
"We rate CONSOLIDATED EDISON INC (ED) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its attractive valuation levels, good cash flow from operations, increase in stock price during the past year, largely solid financial position with reasonable debt levels by most measures and notable return on equity. We feel these strengths outweigh the fact that the company has had sub par growth in net income."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Net operating cash flow has significantly increased by 86.41% to $494.00 million when compared to the same quarter last year. In addition, CONSOLIDATED EDISON INC has also vastly surpassed the industry average cash flow growth rate of -3.45%.
- Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
- The debt-to-equity ratio is somewhat low, currently at 0.99, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Even though the company has a strong debt-to-equity ratio, the quick ratio of 0.44 is very weak and demonstrates a lack of ability to pay short-term obligations.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Multi-Utilities industry and the overall market on the basis of return on equity, CONSOLIDATED EDISON INC has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
- You can view the full analysis from the report here: ED Ratings Report