Duke Energy Corporation (DUK) and WEC Energy Group (WEC) Critical Review

Duke Energy Corporation (NYSE: DUK) and WEC Energy Group (NYSE:WEC) are both large-cap utilities companies, but which is the better investment? We will compare the two businesses based on the strength of their profitability, risk, dividends, institutional ownership, earnings, valuation and analyst recommendations.

Profitability

This table compares Duke Energy Corporation and WEC Energy Group’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Duke Energy Corporation 9.89% 7.72% 2.38%
WEC Energy Group 12.79% 10.62% 3.18%

Dividends

Duke Energy Corporation pays an annual dividend of $3.56 per share and has a dividend yield of 4.0%. WEC Energy Group pays an annual dividend of $2.08 per share and has a dividend yield of 3.1%. Duke Energy Corporation pays out 105.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. WEC Energy Group pays out 68.4% of its earnings in the form of a dividend. Duke Energy Corporation has raised its dividend for 10 consecutive years and WEC Energy Group has raised its dividend for 6 consecutive years. Duke Energy Corporation is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Insider and Institutional Ownership

56.2% of Duke Energy Corporation shares are held by institutional investors. Comparatively, 70.4% of WEC Energy Group shares are held by institutional investors. 0.1% of Duke Energy Corporation shares are held by company insiders. Comparatively, 1.0% of WEC Energy Group shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Analyst Ratings

This is a breakdown of current ratings for Duke Energy Corporation and WEC Energy Group, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Duke Energy Corporation 1 11 2 0 2.07
WEC Energy Group 1 6 1 0 2.00

Duke Energy Corporation currently has a consensus target price of $85.85, indicating a potential downside of 2.57%. WEC Energy Group has a consensus target price of $63.14, indicating a potential downside of 6.41%. Given Duke Energy Corporation’s stronger consensus rating and higher probable upside, equities analysts plainly believe Duke Energy Corporation is more favorable than WEC Energy Group.

Valuation and Earnings

This table compares Duke Energy Corporation and WEC Energy Group’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Duke Energy Corporation $23.07 billion 2.67 $10.44 billion $3.37 26.15
WEC Energy Group $7.61 billion 2.80 $2.51 billion $3.04 22.19

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

Volatility & Risk

Duke Energy Corporation has a beta of 0.24, indicating that its stock price is 76% less volatile than the S&P 500. Comparatively, WEC Energy Group has a beta of 0.12, indicating that its stock price is 88% less volatile than the S&P 500.

Summary

Duke Energy Corporation beats WEC Energy Group on 9 of the 17 factors compared between the two stocks.

Duke Energy Corporation Company Profile

Duke Energy Corporation (Duke Energy) is an energy company. The Company operates through three segments: Electric Utilities and Infrastructure; Gas Utilities and Infrastructure, and Commercial Renewables. The Company operates in the United States through its direct and indirect subsidiaries. The Electric Utilities and Infrastructure segment provides retail electric service through the generation, transmission, distribution and sale of electricity to approximately 7.5 million customers within the Southeast and Midwest regions of the United States. The operations include electricity sold wholesale to municipalities, electric cooperative utilities and other load-serving entities. The Gas Utilities and Infrastructure segment serves residential, commercial, industrial and power generation natural gas customers. The Commercial Renewables primarily acquires, builds, develops and operates wind and solar renewable generation throughout the continental United States.

WEC Energy Group Company Profile

WEC Energy Group, Inc. was a diversified holding company with natural gas and electric utility operations, an approximately 60% equity ownership interest in American Transmission Company LLC, and non-utility electric operations through its We Power business, as of December 31, 2016. Its segments include Wisconsin; Illinois; Other States; Electric Transmission; We Power, and Corporate and Other. Wisconsin includes the electric and natural gas utility operations of Wisconsin Electric Power Company, Wisconsin Gas LLC, and Wisconsin Public Service Corporation, including WE’s and WPS’s electric and natural gas operations in the state of Michigan. Illinois includes the natural gas utility and non-utility operations of The Peoples Gas Light and Coke Company and North Shore Gas Company. Other states includes the natural gas utility and non-utility operations of Minnesota Energy Resources Corporation and Michigan Gas Utilities Corporation.

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