Head-To-Head Survey: NiSource (NYSE:NI) & Sempra Energy (SRE)

Sempra Energy (NYSE: SRE) and NiSource (NYSE:NI) are both mid-cap utilities companies, but which is the superior investment? We will compare the two companies based on the strength of their valuation, risk, dividends, earnings, analyst recommendations, institutional ownership and profitability.

Profitability

This table compares Sempra Energy and NiSource’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Sempra Energy 15.51% 9.11% 2.84%
NiSource 5.96% 9.17% 2.00%

Dividends

Sempra Energy pays an annual dividend of $3.29 per share and has a dividend yield of 2.8%. NiSource pays an annual dividend of $0.70 per share and has a dividend yield of 2.7%. Sempra Energy pays out 48.7% of its earnings in the form of a dividend. NiSource pays out 81.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. NiSource has increased its dividend for 6 consecutive years. Sempra Energy is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Sempra Energy and NiSource, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Sempra Energy 0 2 4 0 2.67
NiSource 1 5 6 0 2.42

Sempra Energy presently has a consensus price target of $121.60, suggesting a potential upside of 5.18%. NiSource has a consensus price target of $25.86, suggesting a potential downside of 1.87%. Given Sempra Energy’s stronger consensus rating and higher probable upside, equities research analysts clearly believe Sempra Energy is more favorable than NiSource.

Valuation and Earnings

This table compares Sempra Energy and NiSource’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Sempra Energy $10.97 billion 2.64 $3.71 billion $6.75 17.13
NiSource $4.75 billion 1.81 $1.40 billion $0.86 30.64

Sempra Energy has higher revenue and earnings than NiSource. Sempra Energy is trading at a lower price-to-earnings ratio than NiSource, indicating that it is currently the more affordable of the two stocks.

Insider and Institutional Ownership

80.5% of Sempra Energy shares are owned by institutional investors. Comparatively, 82.9% of NiSource shares are owned by institutional investors. 0.2% of Sempra Energy shares are owned by insiders. Comparatively, 0.3% of NiSource shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Volatility and Risk

Sempra Energy has a beta of 0.54, meaning that its stock price is 46% less volatile than the S&P 500. Comparatively, NiSource has a beta of 0.37, meaning that its stock price is 63% less volatile than the S&P 500.

Summary

Sempra Energy beats NiSource on 11 of the 17 factors compared between the two stocks.

Sempra Energy Company Profile

Sempra Energy is a holding company. The Company’s principal operating units are Sempra Utilities, which includes its San Diego Gas & Electric Company (SDG&E), Southern California Gas Company (SoCalGas) and Sempra South American Utilities segments, and Sempra Infrastructure, which includes its Sempra Mexico, Sempra Renewables and Sempra LNG & Midstream segments. As of December 31, 2016, SDG&E’s service area covered 4,100 square miles. Sempra South American Utilities operates Chilquinta Energia, which serves customers in the region of Valparaiso in central Chile. As of December 31, 2016, SoCalGas had natural gas franchises with the 12 counties and the 223 cities in its service territory. Sempra LNG & Midstream owns land in Simpson County, Mississippi Hub. Sempra LNG & Midstream owns land in Port Arthur, Texas. Sempra Renewables has operations, investments or development projects in the various United States markets.

NiSource Company Profile

NiSource Inc. is an energy holding company. The Company is engaged in the distribution of natural gas. The Company operates through two business segments: Gas Distribution Operations and Electric Operations. The Company’s Gas Distribution Operations segment provides natural gas service and transportation for residential, commercial and industrial customers in Ohio, Pennsylvania, Virginia, Kentucky, Maryland, Indiana and Massachusetts. As of December 31, 2016, the Company’s Electric Operations segment provided electric services in 20 counties in the northern part of Indiana. The Company’s electric operations segment generated, transmitted and distributed electricity through the Company’s subsidiary NIPSCO to approximately 466,000 customers in 20 counties in the northern part of Indiana and engaged in wholesale and transmission transactions, as of December 31, 2016. NIPSCO owned and operated three coal-fired electric generating stations, as of December 31, 2016.

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