MeritValue

SOUTHERN CALIFORNIA EDISON Co

SCE-PNdata completeness 88%5 fiscal years on file

Data notes: no data for concept 'revenue'; no data for concept 'epsDiluted'

The thesis, from the filings

SOUTHERN CALIFORNIA EDISON Co earns about 11% on invested capital, with a roughly flat share count. The applicable estimate puts fair value near $24.78 a share.Whether it’s worth owning at today’s price is the last question — and yours to answer, below.

i. The business — what you’d actually own
FigureFY 2007FY 2008FY 2009FY 2010FY 2011
Revenue—————
Net income$707M1$683M2$1.23B3$1.04B3$1.09B3
Operating cash flow$2.97B4$1.62B5$4.07B6$3.39B6$3.26B6
Capital expenditure$2.29B7$2.27B8$3B9$3.78B9$4.12B9
Free cash flow (derived)$687M4−$645M5$1.07B6−$394M6−$861M6
Total debt—$8.26B10$6.74B11$7.63B12$8.85B12
Cash & equivalents$252M13$1.61B14$462M14$257M14$57M14
Diluted shares—434.9M434.9M434.9M434.9M

Superscripts are receipts. Each links to the SEC filing the number came from (full list at the bottom).

ii. Your slice — ownership made literal
If you owned
shares
Net assets behind them
$228.98
your share of equity
Profit it earned you last year
$24.95
Free cash flow it threw off
−$19.8
Debt you’d be carrying
$203.5

10 shares is a claim on $228.98 of net worth that earned you $24.95 and generated −$19.8 of cash last year, against $203.5 of debt.

iii. Is this a good business?
Moat signal · return on invested capital
11% avg · 5y
FY07 19%FY08 8%FY09 12%FY10 8%FY11 8%

It earned an average 11% on invested capital over 5 years. Compare that to what it costs to fund the business.

seeing a moat in the numbers →
Management signal · capital allocation
−0% shares · 5y

Share count is roughly flat over 5 years — little dilution, little buyback. Total debt has held roughly steady.

reading capital allocation →

Signals, not verdicts — read from the filings above. Numbers don’t prove a moat; they show its footprint. You decide.

iv. What it’s worth — engine v0.1.0
DCF · Growth Exit 10Y
not applicable
3y-median FCF non-positive — growth-exit DCF not applicable (see EPV)
DCF · Growth Exit 5Y
not applicable
3y-median FCF non-positive — growth-exit DCF not applicable (see EPV)
Earnings Power Value
$24.78
assumptions (8)
  • riskFreeRate4.7%
  • equityRiskPremium5.0%
  • beta100.0%
  • equityWeight85.0%
  • costOfDebtSpread1.5%
  • taxRate21.0%
  • normalizedEarnings$1.04B
  • growthAssumed0.0%
Graham Number
not applicable
diluted EPS missing or non-positive — Graham Number undefined

Different models answer different questions — which to trust when →

Sources — the receipts
  1. 10-K · period ending 2007-12-31 · accession 0001047469-10-001605 (NetIncomeLoss)
  2. 10-K · period ending 2008-12-31 · accession 0001047469-11-001487 (NetIncomeLoss)
  3. 10-K · period ending 2009-12-31 · accession 0000092103-12-000008 (NetIncomeLoss)
  4. 10-K · period ending 2007-12-31 · accession 0001047469-10-001605 (NetCashProvidedByUsedInOperatingActivities)
  5. 10-K · period ending 2008-12-31 · accession 0001047469-11-001487 (NetCashProvidedByUsedInOperatingActivities)
  6. 10-K · period ending 2009-12-31 · accession 0000092103-12-000008 (NetCashProvidedByUsedInOperatingActivities)
  7. 10-K · period ending 2007-12-31 · accession 0001047469-10-001605 (PaymentsToAcquirePropertyPlantAndEquipment)
  8. 10-K · period ending 2008-12-31 · accession 0001047469-11-001487 (PaymentsToAcquirePropertyPlantAndEquipment)
  9. 10-K · period ending 2009-12-31 · accession 0000092103-12-000008 (PaymentsToAcquirePropertyPlantAndEquipment)
  10. 10-K · period ending 2008-12-31 · accession 0001047469-10-001605 (LongTermDebtNoncurrent)
  11. 10-K · period ending 2009-12-31 · accession 0001047469-11-001487 (LongTermDebtNoncurrent)
  12. 10-K · period ending 2010-12-31 · accession 0000092103-12-000008 (LongTermDebtNoncurrent)
  13. 10-K · period ending 2007-12-31 · accession 0001047469-11-001487 (CashAndCashEquivalentsAtCarryingValue)
  14. 10-K · period ending 2008-12-31 · accession 0000092103-12-000008 (CashAndCashEquivalentsAtCarryingValue)