Analyzing Dynegy (DYN) & PNM Resources (PNM)

Dynegy (NYSE:DYN) and PNM Resources (NYSE:PNM) are both utilities companies, but which is the superior stock? We will contrast the two businesses based on the strength of their risk, institutional ownership, dividends, profitability, analyst recommendations, earnings and valuation.

Analyst Recommendations

This is a breakdown of current ratings for Dynegy and PNM Resources, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Dynegy 0 1 1 0 2.50
PNM Resources 3 4 0 0 1.57

Dynegy presently has a consensus target price of $14.00, indicating a potential upside of 9.29%. PNM Resources has a consensus target price of $38.00, indicating a potential downside of 12.08%. Given Dynegy’s stronger consensus rating and higher possible upside, equities research analysts plainly believe Dynegy is more favorable than PNM Resources.

Profitability

This table compares Dynegy and PNM Resources’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Dynegy N/A N/A N/A
PNM Resources 6.08% 9.25% 2.45%

Valuation and Earnings

This table compares Dynegy and PNM Resources’ top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Dynegy N/A N/A N/A N/A N/A
PNM Resources $1.45 billion 2.38 $80.40 million $1.94 22.28

PNM Resources has higher revenue and earnings than Dynegy.

Dividends

PNM Resources pays an annual dividend of $1.06 per share and has a dividend yield of 2.5%. Dynegy does not pay a dividend. PNM Resources pays out 54.6% of its earnings in the form of a dividend. PNM Resources has raised its dividend for 6 consecutive years.

Institutional & Insider Ownership

91.5% of PNM Resources shares are held by institutional investors. 1.8% of Dynegy shares are held by company insiders. Comparatively, 1.3% of PNM Resources shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Summary

PNM Resources beats Dynegy on 7 of the 12 factors compared between the two stocks.

Dynegy Company Profile

Dynegy Inc., through its subsidiaries, produces and sells electric energy, capacity, and ancillary services in the United States. It operates in five segments: PJM, NY/NE, ERCOT, MISO, and CAISO. The company sells its services on a wholesale basis from its power generation facilities. It has a fleet of 43 power plants in 12 states totaling approximately 28,000 megawatts of generating capacity. The company serves a range of customers, including regional transmission organizations, independent system operators, integrated utilities, municipalities, electric cooperatives, transmission and distribution utilities, and power marketers; financial participants, such as banks and hedge funds; and residential, commercial, and industrial end-users. Dynegy Inc. was founded in 1984 and is headquartered in Houston, Texas.

PNM Resources Company Profile

PNM Resources, Inc., through its subsidiaries, engages in the energy and energy-related businesses in the United States. It operates through Public Service Company of New Mexico (PNM) and Texas-New Mexico Power Company (TNMP) segments. The PNM segment is primarily involved in the generation, transmission, and distribution of electricity. It generates electricity using coal, natural gas and oil, nuclear fuel, solar, wind, and geothermal energy sources. As of December 31, 2017, this segment had owned or leased facilities with a total net generation capacity of 2,102 megawatts; and owned 3,200 miles of electric transmission lines, 6,063 miles of distribution overhead lines, 5,828 miles of underground distribution lines, and 254 substations. It also owns and leases office and other equipment, office space, vehicles, and real estate. The TNMP segment provides regulated transmission and distribution services. As of December 31, 2017, this segment owned 978 miles of overhead electric transmission lines, 7,111 miles of overhead distribution lines, 1,241 miles of underground distribution lines, and 116 substations. It also owns and leases vehicles, service facilities, and office locations throughout its service territory. The company serves approximately 773,000 residential, commercial, and industrial customers, as well as end-users of electricity in New Mexico and Texas. PNM Resources, Inc. was founded in 1917 and is headquartered in Albuquerque, New Mexico.

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