I have recently been looking for companies with no losses sustained over the last five years, that are beating the S&P 500 index's dividend and have an earnings yield that is higher than the spot rate on the 20-Year high-quality market corporate bond.
These bonds are a securiy that represents corporate loans issued by triple-A, double-A and single-A rated companies. The financial instrument has an average 4.4% spot rate according to the Federal Reserve Bank of St. Louis. The S&P 500 index has a dividend yield of 1.91% as of Nov. 16.
The screener generated one result that met the criteria :Consolidated Edison Inc. (ED, Financial), which is one of the U.S.'s largest investor-owned energy companies. The company provides a wide range of energy-related products and services with sales of approximately $12.03 billion in 2017.
The stock is trading at a compelling valuation as of Friday. Following a 10% decline, the share price touched $77 at close on Friday and was below the 200-, 100- and 50-day simple moving average lines. The market value was approximately $23.98 billion. The share price at close on Friday was about $6 above the 52-week low of $71.12 and well below the 52-week high of $89.70.
The price-book ratio of 1.51 is close to the industry median of 1.52. The price-earnings ratio of 15.43 equates to an earnings yield of 6.5%, which is nearly 50% over the spot rate of 4.4% on the 20-year high-quality market corporate bond.
Not only has Consolidated Edison sustained no losses within the past five years, but the company has also grown yearly net income by an average of nearly 6% over the same period.
The increase in the bottom line resulted from a steadily growing annual sales turnover.
Shareholders of Consolidated Edison received a 95% premium to its trailing 12-month sales per share at the end of trading on Friday.
GuruFocus has assigned a 5 out of 10 rating for profitability and growth of the company. In regard to its ability to create and grow profit in the future, analysts are forecasting that Consolidated Edison will increase annual net earnings at an average rate of 2.87% over the next five years.
The energy-related products and services are provided through four regulated utility electric, gas and steam subsidiaries. The company serves wholesale and retail customers in New York City, Westchester County, the district of Manhattan, the southeastern part of New York and northern New Jersey.
Consolidated Edison also owns and operates a subsidiary for renewable and energy infrastructure projects. The company is also making investments in electric and natural gas transmission projects through its sixth subsidiary, Edison Transmission.
GuruFocus has assigned a financial strength rating of 4 out of 10, suggesting the company's balance sheet could have problems during hard economic slowdowns and recessions. That is likely the result of below industry median ratios of 113% for debt-to-equity and 3.07 for the trailing 12-month interest coverage.Ă‚
Consolidated Edison has an Altman Z-score of 1.10, which indicates that the company is at risk of going bankrupt in the next 24 months.Regardless, other figures indicates the business is doing much better than its competitors. For example, the earnings before interest, taxes, depreciation and amortization grew at a higher rate than its peers and the trailing 12-month EBITDA margin is 32% versus 24% for the industry.
As of Sept. 30, the company has total assets valued at $49.54 billion, total liabilities valued at $33.65 billion and the total stockholder equity is worth $15.32 billion.
The company has paid dividends since 1970. Consolidated Edison is distributing a quarterly dividend of 71.5 cents, for an annual dividend of $2.86 per share. The dividend has increased at an average rate of 2.7% over the last 5 years.
Consolidated Edison has a recommendation rating of 3.3 out of 5 and an average target price of $77.53 per share.
During the third quarter, Ken Fisher increased his position by 32.11% to 5,270 shares and Barrow, Hanley, Mewhinney & Strauss increased its holding by 0.87% to 26,103 shares.
Joel Greenblatt sold out.
Disclosure: I have no positions in any securities mentioned in this article.
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