Analyzing DTE Energy (DTE) & FirstEnergy (FE)

DTE Energy (NYSE: DTE) and FirstEnergy (NYSE:FE) are both large-cap utilities companies, but which is the superior stock? We will compare the two businesses based on the strength of their earnings, risk, valuation, profitability, dividends, analyst recommendations and institutional ownership.

Dividends

DTE Energy pays an annual dividend of $3.53 per share and has a dividend yield of 3.5%. FirstEnergy pays an annual dividend of $1.44 per share and has a dividend yield of 4.6%. DTE Energy pays out 64.7% of its earnings in the form of a dividend. FirstEnergy pays out -12.2% 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. FirstEnergy has raised its dividend for 6 consecutive years. FirstEnergy is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Earnings & Valuation

This table compares DTE Energy and FirstEnergy’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
DTE Energy $10.63 billion 1.71 $868.00 million $5.46 18.51
FirstEnergy $14.56 billion 0.96 -$6.18 billion ($11.77) -2.66

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

Profitability

This table compares DTE Energy and FirstEnergy’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
DTE Energy 8.01% 9.56% 2.84%
FirstEnergy -35.99% 19.29% 2.79%

Institutional and Insider Ownership

68.2% of DTE Energy shares are owned by institutional investors. Comparatively, 83.3% of FirstEnergy shares are owned by institutional investors. 0.5% of DTE Energy shares are owned by insiders. Comparatively, 0.3% of FirstEnergy shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Risk and Volatility

DTE Energy has a beta of 0.15, indicating that its share price is 85% less volatile than the S&P 500. Comparatively, FirstEnergy has a beta of 0.35, indicating that its share price is 65% less volatile than the S&P 500.

Analyst Recommendations

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

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
DTE Energy 1 3 5 0 2.44
FirstEnergy 0 7 7 0 2.50

DTE Energy presently has a consensus price target of $114.19, suggesting a potential upside of 12.99%. FirstEnergy has a consensus price target of $35.50, suggesting a potential upside of 13.45%. Given FirstEnergy’s stronger consensus rating and higher probable upside, analysts clearly believe FirstEnergy is more favorable than DTE Energy.

Summary

FirstEnergy beats DTE Energy on 10 of the 17 factors compared between the two stocks.

About DTE Energy

DTE Energy Company is an energy company. Its segments include Electric, which consists of DTE Electric Company, which is engaged in the generation, purchase, distribution and sale of electricity to residential, commercial and industrial customers in southeastern Michigan; Gas, which consists of DTE Gas Company, which is engaged in the purchase, storage, transportation, distribution and sale of natural gas to residential, commercial and industrial customers throughout Michigan; Gas Storage and Pipelines, which consists of natural gas pipeline, gathering and storage businesses; Power and Industrial Projects, which consists of projects that deliver energy and utility-type products and services to industrial, commercial and institutional customers, and sell electricity from renewable energy projects; Energy Trading, which consists of energy marketing and trading operations, and Corporate and Other, which includes various holding company activities and holds certain non-utility debt.

About FirstEnergy

FirstEnergy Corp. is a holding company. The Company is engaged in holding, directly or indirectly, all of the outstanding equity of its principal subsidiaries. Its segments include Regulated Distribution, Regulated Transmission, Competitive Energy Services (CES) and Corporate/Other. As of December 31, 2016, the Regulated Distribution segment distributed electricity through the Company’s 10 utility operating companies, serving approximately six million customers, and purchased power for its provider of last resort (POLR), standard offer service (SOS), standard offer service (SSO) and default service requirements in Ohio, Pennsylvania, New Jersey and Maryland. The Regulated Transmission segment transmits electricity through transmission facilities owned and operated by American Transmission Systems, Incorporated (ATSI) and Trans-Allegheny Interstate Line Company (TrAIL). The CES segment primarily supplies electricity to end use customers through retail and wholesale arrangements.

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