Financial Analysis: National Grid (NGG) vs. Tc Pipelines (TRP)

National Grid (NYSE:NGG) and Tc Pipelines (NYSE:TRP) are both large-cap utilities companies, but which is the superior stock? We will compare the two companies based on the strength of their profitability, risk, valuation, dividends, analyst recommendations, earnings and institutional ownership.

Earnings and Valuation

This table compares National Grid and Tc Pipelines’ revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
National Grid $20.22 billion 1.76 $4.71 billion $3.93 13.48
Tc Pipelines $10.37 billion 3.65 $2.44 billion $2.38 17.43

National Grid has higher revenue and earnings than Tc Pipelines. National Grid is trading at a lower price-to-earnings ratio than Tc Pipelines, indicating that it is currently the more affordable of the two stocks.

Insider & Institutional Ownership

5.5% of National Grid shares are owned by institutional investors. Comparatively, 61.9% of Tc Pipelines shares are owned by institutional investors. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Risk & Volatility

National Grid has a beta of 0.22, meaning that its stock price is 78% less volatile than the S&P 500. Comparatively, Tc Pipelines has a beta of 0.62, meaning that its stock price is 38% less volatile than the S&P 500.

Profitability

This table compares National Grid and Tc Pipelines’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
National Grid N/A N/A N/A
Tc Pipelines 25.58% 13.43% 3.65%

Analyst Recommendations

This is a breakdown of current recommendations and price targets for National Grid and Tc Pipelines, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
National Grid 0 3 3 0 2.50
Tc Pipelines 1 4 6 0 2.45

Tc Pipelines has a consensus price target of $51.80, suggesting a potential upside of 24.88%. Given Tc Pipelines’ higher possible upside, analysts plainly believe Tc Pipelines is more favorable than National Grid.

Dividends

National Grid pays an annual dividend of $2.10 per share and has a dividend yield of 4.0%. Tc Pipelines pays an annual dividend of $2.13 per share and has a dividend yield of 5.1%. National Grid pays out 53.4% of its earnings in the form of a dividend. Tc Pipelines pays out 89.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Tc Pipelines has increased its dividend for 2 consecutive years. Tc Pipelines is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

Tc Pipelines beats National Grid on 11 of the 16 factors compared between the two stocks.

About National Grid

National Grid Plc engages in the transmission and distribution of electricity and gas. It operates through the following segments: UK Electricity Transmission, UK Gas Transmission, and U.S. Regulated. The UK Electricity Transmission segment engages in electricity transmission in England and Wales. The UK Gas Transmission segment owns and operates the gas national transmission system in Great Britain, with day-to-day responsibility for balancing demand. The U.S. Regulated segment owns and operates electricity distribution networks in upstate New York, Massachusetts, and Rhode Island. The company was founded in 1989 and is headquartered in London, the United Kingdom.

About Tc Pipelines

TransCanada Corporation operates as an energy infrastructure company in North America. It operates through Canadian Natural Gas Pipelines, U.S. Natural Gas Pipelines, Mexico Natural Gas Pipelines, Liquids Pipelines, and Energy segments. The company transports natural gas to local distribution companies, power generation and individual facilities, interconnecting pipelines, and other businesses. It owns and operates a network of 80,800 km of wholly-owned natural gas pipelines and 11,100 km of partially-owned natural gas pipelines; and regulated natural gas storage facilities with a total working gas capacity of 535 Bcf. The company also owns and operates Keystone pipeline system of 4,324 km for the transportation of crude oil from Hardisty, Alberta to Wood River and Patoka in Illinois; Cushing, Oklahoma; and the U.S. Gulf Coast. In addition, it operates terminal and pipeline facilities to transport crude oil from the market hub at Cushing, Oklahoma to the U.S. Gulf Coast refining markets. Further, the company owns, controls, and develops approximately 7,000 MW of generation capacity powered by natural gas, nuclear, and wind assets; and owns and operates regulated and unregulated natural gas storage facilities. It also operates 11 power generation facilities and 118 Bcf of non-regulated natural gas storage facilities in Alberta, Ontario, Québec, and New Brunswick in Canada, as well as in Arizona. TransCanada Corporation was founded in 1951 and is headquartered in Calgary, Canada.

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