Critical Analysis: UNITIL Corporation (UTL) vs. WEC Energy Group (WEC)

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

Volatility and Risk

UNITIL Corporation has a beta of 0.21, indicating that its stock price is 79% less volatile than the S&P 500. Comparatively, WEC Energy Group has a beta of 0.14, indicating that its stock price is 86% less volatile than the S&P 500.

Insider & Institutional Ownership

58.8% of UNITIL Corporation shares are owned by institutional investors. Comparatively, 70.4% of WEC Energy Group shares are owned by institutional investors. 2.5% of UNITIL Corporation shares are owned by insiders. Comparatively, 1.0% of WEC Energy Group shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Dividends

UNITIL Corporation pays an annual dividend of $1.44 per share and has a dividend yield of 2.8%. WEC Energy Group pays an annual dividend of $2.08 per share and has a dividend yield of 3.1%. UNITIL Corporation pays out 72.0% of its earnings in the form of a dividend. WEC Energy Group pays out 68.4% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. UNITIL Corporation has raised its dividend for 2 consecutive years and WEC Energy Group has raised its dividend for 6 consecutive years. WEC Energy Group is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

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

Net Margins Return on Equity Return on Assets
UNITIL Corporation 7.09% 9.39% 2.45%
WEC Energy Group 12.79% 10.62% 3.18%

Analyst Ratings

This is a summary of current ratings and recommmendations for UNITIL Corporation and WEC Energy Group, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
UNITIL Corporation 0 1 0 0 2.00
WEC Energy Group 1 6 0 0 1.86

UNITIL Corporation currently has a consensus target price of $47.00, suggesting a potential downside of 9.39%. WEC Energy Group has a consensus target price of $63.17, suggesting a potential downside of 7.34%. Given WEC Energy Group’s higher probable upside, analysts plainly believe WEC Energy Group is more favorable than UNITIL Corporation.

Valuation and Earnings

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

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
UNITIL Corporation $383.40 million 1.91 $27.10 million $2.00 25.94
WEC Energy Group $7.47 billion 2.88 $940.20 million $3.04 22.42

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

Summary

WEC Energy Group beats UNITIL Corporation on 12 of the 16 factors compared between the two stocks.

UNITIL Corporation Company Profile

Unitil Corporation is a public utility holding company. The Company’s principal business is the local distribution of electricity in the southeastern seacoast and state capital regions of New Hampshire and the greater Fitchburg area of north central Massachusetts and the local distribution of natural gas in southeastern New Hampshire, portions of southern Maine to the Lewiston-Auburn area and in the greater Fitchburg area of north central Massachusetts. Its segments include utility gas operations, utility electric operations and non-regulated. Its operations include natural gas operations; natural gas distribution utility operations; gas transmission pipeline operations; electric distribution utility operations, and non-regulated and other non-utility operations. As of December 31, 2016, it was engaged in the distribution of electricity and natural gas to approximately 184,200 customers throughout its service territories in the states of New Hampshire, Massachusetts and Maine.

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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