Sempra Energy (NYSE: SRE) and Avangrid (NYSE:AGR) are both large-cap utilities companies, but which is the superior business? We will compare the two companies based on the strength of their risk, valuation, earnings, dividends, institutional ownership, profitability and analyst recommendations.
Valuation & Earnings
This table compares Sempra Energy and Avangrid’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||2.63||$3.71 billion||$6.75||17.03|
|Avangrid||$6.00 billion||2.48||$1.94 billion||$2.18||22.13|
Sempra Energy has higher revenue and earnings than Avangrid. Sempra Energy is trading at a lower price-to-earnings ratio than Avangrid, indicating that it is currently the more affordable of the two stocks.
This is a summary of current ratings and price targets for Sempra Energy and Avangrid, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
Sempra Energy currently has a consensus target price of $123.57, suggesting a potential upside of 7.51%. Avangrid has a consensus target price of $46.17, suggesting a potential downside of 4.32%. Given Sempra Energy’s higher possible upside, research analysts clearly believe Sempra Energy is more favorable than Avangrid.
Insider and Institutional Ownership
80.8% of Sempra Energy shares are held by institutional investors. Comparatively, 13.2% of Avangrid shares are held by institutional investors. 0.2% of Sempra Energy shares are held by insiders. Comparatively, 0.3% of Avangrid shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.
This table compares Sempra Energy and Avangrid’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
Sempra Energy pays an annual dividend of $3.29 per share and has a dividend yield of 2.9%. Avangrid pays an annual dividend of $1.73 per share and has a dividend yield of 3.6%. Sempra Energy pays out 48.7% of its earnings in the form of a dividend. Avangrid pays out 79.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Avangrid has raised its dividend for 6 consecutive years. Avangrid is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Volatility & Risk
Sempra Energy has a beta of 0.55, meaning that its share price is 45% less volatile than the S&P 500. Comparatively, Avangrid has a beta of 0.48, meaning that its share price is 52% less volatile than the S&P 500.
Sempra Energy beats Avangrid on 12 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.
Avangrid Company Profile
Avangrid, Inc. is an energy and utility company. The Company operates through three segments: Networks, Renewables and Gas. The Networks segment includes all the energy transmission and distribution activities, and any other regulated activity originating in New York and Maine, and regulated electric distribution, electric transmission and gas distribution activities originating in Connecticut and Massachusetts. The Renewables segment owns, develops, constructs and/or operates electricity generation, including renewable and thermal generators, and associated transmission facilities. The Renewables segment includes activities relating to renewable energy, mainly wind energy generation and trading related with such activities. The Gas segment operates a natural gas storage and natural gas trading business through its subsidiaries, Enstor, Inc. and Enstor Energy Services, LLC.
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