Analyzing Consolidated Edison (ED) and Spark Energy (SPKE)

Consolidated Edison (NYSE: ED) and Spark Energy (NASDAQ:SPKE) are both utilities companies, but which is the superior investment? We will contrast the two companies based on the strength of their dividends, analyst recommendations, earnings, institutional ownership, valuation, profitability and risk.

Earnings and Valuation

This table compares Consolidated Edison and Spark Energy’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Consolidated Edison $12.03 billion 1.91 $1.53 billion $4.09 18.08
Spark Energy $798.05 million 0.43 $18.85 million ($0.48) -20.73

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

Risk and Volatility

Consolidated Edison has a beta of 0.05, meaning that its stock price is 95% less volatile than the S&P 500. Comparatively, Spark Energy has a beta of -1.87, meaning that its stock price is 287% less volatile than the S&P 500.

Dividends

Consolidated Edison pays an annual dividend of $2.86 per share and has a dividend yield of 3.9%. Spark Energy pays an annual dividend of $0.73 per share and has a dividend yield of 7.3%. Consolidated Edison pays out 69.9% of its earnings in the form of a dividend. Spark Energy pays out -152.1% 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. Consolidated Edison has raised its dividend for 43 consecutive years. Spark Energy is clearly the better dividend stock, given its higher yield and lower payout ratio.

Profitability

This table compares Consolidated Edison and Spark Energy’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Consolidated Edison 12.86% 8.61% 2.67%
Spark Energy 0.48% 3.35% 0.95%

Analyst Recommendations

This is a breakdown of current recommendations for Consolidated Edison and Spark Energy, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Consolidated Edison 3 4 1 0 1.75
Spark Energy 0 1 4 0 2.80

Consolidated Edison presently has a consensus price target of $81.79, suggesting a potential upside of 10.61%. Spark Energy has a consensus price target of $21.30, suggesting a potential upside of 114.07%. Given Spark Energy’s stronger consensus rating and higher possible upside, analysts clearly believe Spark Energy is more favorable than Consolidated Edison.

Insider & Institutional Ownership

56.8% of Consolidated Edison shares are held by institutional investors. Comparatively, 32.0% of Spark Energy shares are held by institutional investors. 0.2% of Consolidated Edison shares are held by insiders. Comparatively, 66.9% of Spark Energy shares are held 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.

Summary

Consolidated Edison beats Spark Energy on 11 of the 17 factors compared between the two stocks.

About Consolidated Edison

Consolidated Edison, Inc. (Con Edison) is a holding company. The Company operates through its subsidiaries, which include Consolidated Edison Company of New York, Inc. (CECONY), Orange and Rockland Utilities, Inc. (O&R), Con Edison Clean Energy Businesses, Inc. (the Clean Energy Businesses) and Con Edison Transmission, Inc. (Con Edison Transmission). CECONY’s principal business operations are its regulated electric, gas and steam delivery businesses. CECONY provides electricity, natural gas and steam to customers in New York City and Westchester County. O&R’s principal business operations are its regulated electric and gas delivery businesses. The Clean Energy Businesses develop, own and operate renewable and energy infrastructure projects and provide energy-related products and services to wholesale and retail customers. Con Edison Transmission, through its subsidiaries, invests in electric transmission facilities and gas pipeline and storage facilities.

About Spark Energy

Spark Energy, Inc., through its subsidiaries, operates as an independent retail energy services company in the United States. It operates through two segments, Retail Electricity and Retail Natural Gas. The company is involved in the retail distribution of electricity and natural gas to residential, commercial, and industrial customers. As of December 31, 2017, it operated in 94 utility service territories across 19 states and the District of Columbia, and had approximately 1,042,000 residential customer equivalents. The company was founded in 1999 and is headquartered in Houston, Texas. Spark Energy, Inc. is a subsidiary of Retailco, LLC.

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