Is EIX a good stock to buy?We came across a bullish thesis on Edison International on r/ValueInvesting by u/WestCoastInvestor. Since the thesis was published on August 29th, EIX shares have pulled back as stalled wildfire-liability reforms and Eaton Fire claims weighed on sentiment, creating a near-term hurdle despite the company's stronger core earnings. In this article, we will summarize the bulls' thesis on EIX. Edison International's share was trading at $58.83 as of October 28th 2026. EIX's trailing and forward P/E were 6.00 and 8.95 respectively according to Yahoo Finance.
This isn't the first time we see a utility company pitched as a great investment. EIX shares gained 5.73% over the last 12 months. Comparable stocks like PG&E and Sempra lost 17.30% and 8.41% of their value, respectively, during the same period. EIX's better performance may partly reflect a regulatory decision allowing Southern California Edison to collect more revenue, which helped lift its core earnings. Why are California utility stocks struggling and does EIX's retreat since June offer a chance to buy a stock that has held up better than its peers?
In June, we published an article about the 12 Best NYSE Stocks to Buy for Dividends and EIX ranked #11 in that article. Btw, the #1 stock in that list returned 38.27% since then. So, hedge funds were right about their #1 pick but EIX, which lost ground since then, was a disappointment. This article highlights EIX among the 10 High-Yield Stocks for Lasting Retirement Income. Before getting into our analysis, let's take a look at the business and why some investors like the stock so much.
Edison International (NYSE:EIX) provides electricity generation and distribution services through Southern California Edison, one of California's largest regulated utilities. Its investment case right now is centered on whether the market has overreacted to wildfire liability concerns after California's SB 492 setback. SB 492 is a state bill that was rewritten in late August 2026 to address wildfire liability, aiming to give utilities added legal protections from fire-related lawsuits; the version that reached lawmakers excluded those protections and instead preserved wildfire survivors' right to sue utilities directly.
Read More: 15 AI Stocks That Are Quietly Making Investors Rich
Read More: Undervalued AI Stock Poised For Massive Gains: 10000% Upside Potential
Edison International shares fell roughly 23% in its worst single-day decline in more than two decades after the bill excluded expected liability protections, but the legislation did not create a new wildfire loss, remove the existing Wildfire Fund, or fundamentally change Edison International's regulated utility business. After the selloff, the stock trades around $55, or about 7.2 times earnings, with a nearly 5% dividend yield, suggesting investors are already pricing in a severe downside outcome.
The bullish case rests on the idea that investors are focusing on the loss-sharing uncertainty while ignoring the protections that remain in place. SB 492 removed the possibility of expected subrogation reform and a per-incident liability cap, but it did not eliminate the Wildfire Fund created under AB 1054 — a 2019 California law that set up a multibillion-dollar fund utilities can draw on to help cover wildfire liability costs — nor did it change Edison International's existing wildfire exposure overnight. The market quickly moved from assuming additional reform was coming to assuming Edison International would have to manage more uncertainty on its own, creating what bulls view as a forced repricing rather than a fundamental reset.
The evidence supporting the bull case comes from Edison International's remaining liability protections. Southern California Edison absorbs the first approximately $1 billion through its self-insurance layer, while eligible losses beyond that can access the Wildfire Fund, which has more than $21 billion of capacity. Even Jefferies' higher-end gross loss estimate of approximately $13.5 billion remains below the fund's available capacity, although that estimate is not a company figure. The recent selloff reflects uncertainty around how losses are shared, not the disappearance of a backstop that remains in place.
The valuation reset has become the central part of the thesis. Fiscal 2026 earnings estimates are around $6.11 per share, while the company plans approximately $38 billion to $41 billion of capital investment from 2026 through 2030, supporting expectations for long-term earnings growth of roughly 5% to 7%. A regulated utility covering approximately 50,000 square miles of Southern California with a large rate-base expansion plan typically does not trade at this valuation, which is why bulls believe the discount reflects litigation fears more than business deterioration.
The investment case also depends on Edison International's regulated utility operations continuing to provide stable earnings growth despite wildfire uncertainty. The company's large capital investment program supports future rate-base expansion, while the existing regulatory framework remains the foundation of the long-term earnings opportunity. The key question is whether investors are assigning too much weight to wildfire-related uncertainty and not enough value to the underlying utility business.
The stock reaction following SB 492 highlights how quickly sentiment changed around the name. Edison International declined approximately 23%, while PG&E Corporation (NYSE:PCG), another California utility with wildfire exposure, fell around 18%, compared with only about 2% for Sempra (NYSE:SRE) and roughly 1% for the broader utility ETF. The divergence shows that the move was concentrated among companies directly tied to California wildfire headlines rather than a broader utility sector selloff, but investors still need to monitor unresolved liability risks and the potential impact of future legal developments.
The wildfire opportunity remains attractive only if investors believe Edison International can manage its exposure without a permanent impairment to earnings power. The company still faces thousands of wildfire-related claims, and the January 2027 bellwether trial could influence how the market views future liabilities. At the same time, the absence of a near-term legislative catalyst means the stock could remain pressured by headlines, and a negative regulatory outcome could increase borrowing costs and complicate the company's ability to fund its large capital spending plan ( see whether Edison's 6.4% yield compensates for wildfire and financing risks ).
Another risk for the stock is that customer affordability pressures limit the earnings generated by Edison's infrastructure spending. Building more utility assets supports growth only when regulators allow the company to recover those costs and earn a return. Southern California Edison recorded an $88 million impairment in 2025 after regulators disallowed historical capital spending, primarily on rooftop solar. If electricity bills become harder to afford, regulators could scrutinize additional investment and cost recovery more closely. Delayed recovery would tie up cash, while outright disallowances would leave shareholders absorbing costs. This could weaken earnings growth even if wildfire liabilities remain manageable. In our opinion, the stock's discount could persist if the large investment program delivers less profitable growth than investors expect.
Hedge fund positioning shows a mixed but cautious signal. As per our database, 34 hedge fund portfolios held Edison International at the end of the second quarter, down slightly from 35 in the previous quarter. This small dip suggests institutional investors are staying largely put on the stock rather than pulling back sharply, even as questions remain about its wildfire liability exposure. By comparison, Pacific Gas & Electric was held by 80 hedge funds, unchanged from 80, Sempra was held by 46 hedge funds, down from 51, and NextEra Energy (NYSE:NEE) was held by 80 hedge funds, up from 74. NextEra Energy stood out as the only one of these companies to see hedge fund interest rise, while Pacific Gas & Electric held steady and Sempra saw a larger pullback than Edison International, suggesting institutional enthusiasm remained uneven across the group.
Short interest data also paints a fairly cautious picture for Edison International relative to its peers. About 6.38% of Edison International's float is sold short, well above Sempra at 2.34%, PG&E Corporation at 1.44%, and NextEra Energy, Inc. at 2.98%. This suggests Edison International is drawing more skepticism than Sempra, PG&E Corporation, and NextEra Energy, Inc., with bearish bets against it remaining considerably heavier than those against all three peers amid concerns about wildfire liability and regulatory uncertainty.
Valuation Analysis
EIX's forward P/E is 8.95x. PG&E Corporation, Sempra, and NextEra Energy, Inc. trade at forward P/Es of 7.20x, 15.43x, and 19.16x, respectively. EIX's own forward P/E was 9.28x on December 31, 2025, making its current multiple approximately 4% lower. We believe the current valuation reflects significant investor concerns about wildfire liabilities, uncertain cost recovery, and the financing requirements of its infrastructure program. However, the discount to Sempra and NextEra appears substantial given Edison's continuing utility profitability, although its higher multiple than PG&E shows that it is not the cheapest California utility facing wildfire risk. Edison's core earnings per share increased from $2.34 in the first half of 2025 to $2.97 in the first half of 2026, representing approximately 27% growth, primarily supported by the implementation of Southern California Edison's rate-case decision. We believe EIX can justify its current valuation without sustaining this growth rate if regulated investment supports steady earnings and wildfire payments remain manageable. If Edison protects its earnings base and funds its infrastructure program without substantial shareholder dilution, the current valuation could offer an attractive entry point despite the risks surrounding unresolved wildfire liabilities.
Previously, we covered a bullish thesis on Evergy (EVRG) by Hidden Market Gems in April 2025, which highlighted the defensive nature of utilities, resilience against macro uncertainty, and attractive dividend yield. EVRG's stock price has appreciated by approximately 29.27% since our coverage.We believe the current valuation could offer an attractive entry point if Edison sustains regulated earnings growth and funds its investment plan without heavy dilution, despite wildfire liability and cost-recovery risks.
Edison International is not on our list of the 40 Most Popular Stocks Among Hedge Funds . While EIX could offer long-term upside if wildfire liabilities remain manageable and regulated investment supports earnings growth, we believe certain AI infrastructure stocks offer far stronger long-term potential at a much more attractive entry point. If you are looking for an AI stock more promising than EIX that operates as a critical AI tollboothand stands as the most important company in the world, check out our report about this must-own AI stock .
Disclosure: None.
