Edison International (EIX) | The Buildout — AI Infrastructure
The Verdict
Edison International is the parent holding company of Southern California Edison, a California public utility that supplies and delivers electricity across a southern California service territory. After selling the small Trio advisory business to X-energy, the company is essentially a pure-play regulated utility. In the AI buildout, SCE is the wires-and-system-reliability layer that any local load growth, including data centers, would depend on; the company's own disclosures treat AI mainly as an internal efficiency tool rather than a quantified demand pool.
| Market Cap | — |
| Revenue (TTM) | $19.4B |
| Revenue Growth | +10.7% |
| EBITDA Margin (TTM) | 40.3% |
| Net Debt | $43.3B |
| Earnings Beats | 6 of 7 |
| P/E (TTM) | — |
| EV/EBITDA (TTM) | — |
What We Like
- Current GRC authorization gives rate-case visibility through 2028, with an approximately 7% SCE rate base CAGR for 2025–2030.
- Capital plan of $38–41 billion for 2026–2030, reaffirmed in Q2 2026, paired with no new common equity expected through 2030.
- Long-term core EPS growth target of 5%–7%, also reaffirmed in Q2 2026.
- Grid hardening reached about 90% of roughly 16,800 high-fire-risk distribution line miles, with nearly 7,200 miles of covered conductor; management reports no covered-conductor failure of the type the technology is designed to mitigate.
- Owned or contracted storage reached about 9,200 MW after roughly 900 MW was contracted in Q2 2026.
What We’re Watching
- August 31, 2026 legislative session end is the pivot; management says a weak outcome could raise the cost of capital, trigger downgrades, and reduce future capital deployment.
- Eaton Fire liability remains unestimable: WRCP offers exceeded $775M, combined settlements crossed $1B, and more than 30,000 claims were filed by Q2.
- SCE's S&P rating is BBB-, the bottom of investment grade; a downgrade would push it below investment grade.
- CPUC decisions on AMI 2.0 and NextGen ERP are still pending, with no timing update on NextGen ERP.
The regulated-utility operating thesis remains intact on execution—guidance was reaffirmed, AMI 2.0 and RAMP were filed, Woolsey securitization closed, and grid hardening is roughly complete in high-risk areas. But the broader investment case is now explicitly conditional. Management has tied future capital decisions to the cost of equity the market imputes after the August 31 legislative outcome, while Eaton Fire claims continue to grow. The open question is whether Sacramento passes a durable wildfire framework by August 31, 2026.
Earnings Beat
Second-quarter revenue was $4,357 million with a 49.3% gross margin. Core earnings were $592 million, or $1.54 per share, up from $0.97 a year earlier. Management reaffirmed 2026 core EPS guidance of $5.90–$6.20.
| Metric | Q2 FY2026 | Q1 FY2026 | Q2 FY2025 | YoY |
|---|---|---|---|---|
| Revenue | $4.4B | $4.1B | $4.5B | −4.1% |
| Gross margin | 49.3% | 76.4% | 39.8% | +950bps |
| EBITDA | $1.9B | $1.9B | $1.6B | +20.3% |
| EPS | $1.38 | $1.47 | $1.03 | +33.7% |
| Core EPS | $1.54 | $1.42 | $0.97 | +58.8% |
Two quarters does not make a year, and we are focused on delivering on our guidance for the year. The quarter’s a data point, and it is important.— Aaron Moss, CFO, Edison International, July 30, 2026
Management tone: Management's tone on the Q2 call was measured and disciplined, with sharper urgency on wildfire policy. Leaders tied legislative failure to potential credit downgrades and higher financing costs while declining to raise guidance after a strong first half. The CFO described the quarter as a data point and stressed delivery against the full-year guidance.
Management Guidance
Management reaffirmed 2026 core EPS guidance of $5.90–$6.20, long-term core EPS growth of 5%–7%, the $38–41 billion 2026–2030 capital plan, and no new common equity through 2030. The 2027 core EPS target of $6.25–$6.65 and the 2028 and 2030 core EPS targets were also reaffirmed by reference. Management explicitly declined to extrapolate the strong first half into a higher guide.
Trajectory
Revenue is decelerating by the trailing-quarter pattern, with latest Q2 revenue of $4,357 million down 4.1% year over year. Gross margin dipped about 70 basis points while EBITDA margin expanded about 430 basis points over the trailing window. Earnings quality is weak on cash: TTM free cash flow of -$389 million equals about -10% of TTM net income, reflecting heavy capital spending and cost-recovery swings rather than a demand collapse. The revenue line reflects cost-recovery mechanics rather than volume: in Q1 2026 residential revenue rose $571M while commercial fell $198M, and purchased power and fuel declined $77M on lower energy prices.
The Model
The model projects FY+1 revenue of $20,500 million and EBITDA of $7,892 million, a 38.5% margin. It projects FY+2 revenue of $21,800 million and EBITDA of $8,458 million, a 38.8% margin. The near-term projection is anchored by the regulated rate-base growth path of approximately 7% and the reaffirmed 2026–2030 capital plan; FY+2 extends that trajectory with AMI 2.0 and the next GRC cycle as incremental drivers.
| Metric | FY2025 | Next FY (E) | Following FY (E) |
|---|---|---|---|
| Revenue | $19.3B | $20.5B | $21.8B |
| YoY Growth | — | +6.1% | +6.3% |
| EBITDA | $8.5B | $7.9B | $8.5B |
| EBITDA Margin | 43.9% | 38.5% | 38.8% |
Projections are the median of 5 independent model runs. The model’s revenue sits 9.6% above analyst consensus.
Management reaffirmed 2026 core EPS guidance of $5.90–$6.20, long-term core EPS growth of 5%–7%, the $38–41 billion 2026–2030 capital plan, and no new common equity through 2030. The 2027 core EPS target of $6.25–$6.65 and the 2028 and 2030 core EPS targets were also reaffirmed by reference. Management explicitly declined to extrapolate the strong first half into a higher guide.
What Could Go Right — and Wrong
- California passes durable wildfire legislation in 2026, preserving the cost of capital and the full $38–41 billion capital plan.
- AMI 2.0, NextGen ERP, and the next GRC are approved at or near requested levels, locking the 2028–2032 growth path.
- Quantified load growth, including data-center demand in SCE territory, adds rate-base growth above the existing roughly 7% plan.
- Eaton Fire loss estimate becomes manageable and Wildfire Fund pre-funding fully covers settlement costs.
- The 225 MW third storage facility enters service in 2026 and Alberhill construction begins in Q3 2026, extending capacity growth.
- Wildfire legislation fails or is weak, raising SCE's cost of equity and pushing management to cut future capital deployment.
- SCE's S&P rating is downgraded below investment grade, raising debt costs and customer rates.
- Eaton Fire liability estimates emerge large relative to recovery mechanisms, or WRCP acceptance shifts to mass litigation.
- Affordability pressure and rate-design battles constrain the capital plan or force lower rate increases.
- Gas reliability risk from Aliso Canyon and SoCalGas constraints disrupts generation.
Looking Ahead
The next 12 months turn on Sacramento's late-summer wildfire-affordability legislation, the pending CPUC proceedings for AMI 2.0 and NextGen ERP, and the next GRC filing expected next year. On the liability side, the pace of WRCP offers, subrogation settlements, and any Eaton Fire loss estimate could determine how quickly the largest overhang can be framed.
- August 28, 2026Wildfire bill language due — Bills must be in print; first test of the legislative framework's durability.
- August 31, 2026California session ends — Management assesses cost of capital and capital-plan implications within days.
- Q3 2026Q3 2026 earnings — Whether guidance is held again after the legislative outcome.
- 2026225 MW storage facility — Third utility storage facility expected in-service during the year.
- Next yearNext GRC filing — First full post-RAMP test of 2029–2032 capex assumptions.
Financials
Annual Summary
| Metric | FY2024 | FY2025 | TTM | YoY |
|---|---|---|---|---|
| Revenue | $17.6B | $19.3B | $19.4B | +9.8% |
| Gross Margin | 41.3% | 32.1% | 39.9% | 915bps |
| EBITDA | $5.9B | $8.5B | $45.5B | +44.4% |
| EBITDA Margin | 33.3% | 43.9% | 40.3% | +1,054bps |
| Net Income | $1.5B | $4.6B | $3.8B | +208.8% |
| Free Cash Flow | −$693M | −$715M | −$23.3B | — |
| Net Cash | — | — | — | — |
Key Ratios (Trailing)
- P/E TTM—
- EV/EBITDA TTM—
- EV/Revenue TTM—
- Price/FCF TTM—
- Gross Margin (TTM)39.9%
- EBITDA Margin (TTM)40.3%
- Net Margin (TTM)19.8%
- ROIC5.8%
- FCF Conversion-5.0%
- SBC / Revenue0.0%
The Company
Edison International is the parent holding company of Southern California Edison, a California public utility that supplies and delivers electricity across an approximately 50,000-square-mile area of southern California. SCE's system includes about 13,000 circuit-miles of transmission lines, roughly 38,000 circuit-miles of overhead distribution, and about 32,000 circuit-miles of underground distribution. After the sale of Trio to X-energy, SCE is the single reportable segment, making EIX effectively a pure-play regulated utility.
SCE operates under CPUC cost-of-service regulation with a general rate case providing visibility through 2028. It owns generation and storage interests representing about 7,000 MW of net physical capacity, of which SCE's pro-rata share is approximately 3,500 MW, plus two utility storage facilities aggregating 312.5 MW and a third 225 MW facility expected in 2026. Management emphasizes safety, reliability, affordability, wildfire mitigation, and grid modernization.
Business Segments
Competitive Landscape
The provided source material does not name direct competitors. SCE's position rests on its CPUC-regulated service territory; the more relevant structural pressure in the material is the California wildfire-legislation outcome, which management says could raise the cost of capital and lead to reprioritized future capital deployment.
Supply Chain
SCE sits as the regulated transmission-and-distribution layer in Southern California, taking gas transportation, grid equipment, transformers, smart meters, and renewable energy from suppliers and delivering electricity to residential, commercial, and industrial customers.
More on EIX: Earnings recap