El Paso Electric (NYSE:EE) and American Electric Power (NYSE:AEP) are both utilities companies, but which is the superior investment? We will contrast the two businesses based on the strength of their risk, analyst recommendations, profitability, institutional ownership, valuation, earnings and dividends.
Insider and Institutional Ownership
94.7% of El Paso Electric shares are owned by institutional investors. Comparatively, 73.4% of American Electric Power shares are owned by institutional investors. 1.2% of El Paso Electric shares are owned by insiders. Comparatively, 0.2% of American Electric Power shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.
El Paso Electric has a beta of 0.57, meaning that its stock price is 43% less volatile than the S&P 500. Comparatively, American Electric Power has a beta of 0.13, meaning that its stock price is 87% less volatile than the S&P 500.
This is a breakdown of recent ratings and price targets for El Paso Electric and American Electric Power, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|El Paso Electric||0||3||0||0||2.00|
|American Electric Power||0||6||6||0||2.50|
El Paso Electric presently has a consensus target price of $55.33, indicating a potential downside of 16.75%. American Electric Power has a consensus target price of $86.60, indicating a potential downside of 3.75%. Given American Electric Power’s stronger consensus rating and higher possible upside, analysts clearly believe American Electric Power is more favorable than El Paso Electric.
This table compares El Paso Electric and American Electric Power’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|El Paso Electric||10.39%||7.79%||2.48%|
|American Electric Power||12.53%||10.69%||2.93%|
El Paso Electric pays an annual dividend of $1.54 per share and has a dividend yield of 2.3%. American Electric Power pays an annual dividend of $2.68 per share and has a dividend yield of 3.0%. El Paso Electric pays out 66.1% of its earnings in the form of a dividend. American Electric Power pays out 67.8% 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. El Paso Electric has raised its dividend for 7 consecutive years and American Electric Power has raised its dividend for 6 consecutive years.
Earnings & Valuation
This table compares El Paso Electric and American Electric Power’s revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|El Paso Electric||$903.60 million||3.00||$84.32 million||$2.33||28.53|
|American Electric Power||$16.20 billion||2.74||$1.92 billion||$3.95||22.78|
American Electric Power has higher revenue and earnings than El Paso Electric. American Electric Power is trading at a lower price-to-earnings ratio than El Paso Electric, indicating that it is currently the more affordable of the two stocks.
American Electric Power beats El Paso Electric on 10 of the 17 factors compared between the two stocks.
About El Paso Electric
El Paso Electric Co. engages in the generation, transmission, and distribution of electricity in West Texas and southern New Mexico. Its energy sources consist of nuclear fuel, natural gas, coal, wind turbines, and purchased power. The company’s electrical generating facilities include Palo Verde Station, Newman Power Station, Rio Grande Power Station, Four Corners Station, Copper Power Station, and Wind Ranch. It serves residential, commercial, industrial, public authority and wholesale customers in El Paso, Texas and Las Cruces, New Mexico. The company was founded on August 30, 1901 and is headquartered in El Paso, TX.
About American Electric Power
American Electric Power Company, Inc., an electric public utility holding company, engages in the generation, transmission, and distribution of electricity for sale to retail and wholesale customers in the United States. The company generates electricity using coal and lignite, natural gas, nuclear, hydroelectric, solar, wind, and other energy sources. It also supplies and markets electric power at wholesale to other electric utility companies, rural electric cooperatives, municipalities, and other market participants. The company owns, leases, or controls approximately 3,664 railcars, 468 barges, 9 towboats, and a coal handling terminal with approximately 18 million tons of annual capacity. American Electric Power Company, Inc. was founded in 1906 and is headquartered in Columbus, Ohio.
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