The AES Corporation (NYSE: AES) and Pacific Gas & Electric Co. (NYSE:PCG) are both mid-cap utilities companies, but which is the superior business? We will compare the two companies based on the strength of their analyst recommendations, profitabiliy, risk, valuation, earnings, institutional ownership and dividends.

Institutional and Insider Ownership

93.6% of The AES Corporation shares are owned by institutional investors. Comparatively, 81.3% of Pacific Gas & Electric Co. shares are owned by institutional investors. 1.1% of The AES Corporation shares are owned by insiders. Comparatively, 0.2% of Pacific Gas & Electric Co. shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Earnings & Valuation

This table compares The AES Corporation and Pacific Gas & Electric Co.’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
The AES Corporation $13.81 billion 0.53 $3.49 billion ($1.95) -5.69
Pacific Gas & Electric Co. $18.04 billion 1.96 $6.53 billion $4.05 17.02

Pacific Gas & Electric Co. has higher revenue and earnings than The AES Corporation. The AES Corporation is trading at a lower price-to-earnings ratio than Pacific Gas & Electric Co., indicating that it is currently the more affordable of the two stocks.

Risk and Volatility

The AES Corporation has a beta of 1.21, meaning that its share price is 21% more volatile than the S&P 500. Comparatively, Pacific Gas & Electric Co. has a beta of 0.21, meaning that its share price is 79% less volatile than the S&P 500.

Profitability

This table compares The AES Corporation and Pacific Gas & Electric Co.’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
The AES Corporation -9.27% 14.71% 2.33%
Pacific Gas & Electric Co. 11.48% 11.63% 3.11%

Dividends

The AES Corporation pays an annual dividend of $0.48 per share and has a dividend yield of 4.3%. Pacific Gas & Electric Co. pays an annual dividend of $2.12 per share and has a dividend yield of 3.1%. The AES Corporation pays out -24.6% of its earnings in the form of a dividend. Pacific Gas & Electric Co. pays out 52.3% 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. The AES Corporation has raised its dividend for 4 consecutive years. The AES Corporation is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Recommendations

This is a breakdown of current ratings and price targets for The AES Corporation and Pacific Gas & Electric Co., as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
The AES Corporation 1 4 0 0 1.80
Pacific Gas & Electric Co. 0 3 6 0 2.67

The AES Corporation currently has a consensus target price of $12.00, suggesting a potential upside of 8.11%. Pacific Gas & Electric Co. has a consensus target price of $69.50, suggesting a potential upside of 0.81%. Given The AES Corporation’s higher possible upside, analysts clearly believe The AES Corporation is more favorable than Pacific Gas & Electric Co..

Summary

Pacific Gas & Electric Co. beats The AES Corporation on 9 of the 17 factors compared between the two stocks.

About The AES Corporation

The AES Corporation is a holding company. The Company, through its subsidiaries and affiliates, operates a diversified portfolio of electricity generation and distribution businesses. It is organized into six strategic business units (SBUs): the United States; Andes; Brazil; Mexico, Central America and the Caribbean (MCAC); Europe, and Asia. As of December 31, 2016, its United States SBU had 18 generation facilities and two integrated utilities in the United States. As of December 31, 2016, its Andes SBU had generation facilities in three countries. Its Brazil SBU has generation and distribution businesses, Eletropaulo and Tiete. As of December 31, 2016, its MCAC SBU had a portfolio of distribution businesses and generation facilities, including renewable energy, in five countries. As of December 31, 2016, its Europe SBU had generation facilities in five countries. As of December 31, 2016, its Asia SBU had generation facilities in three countries.

About Pacific Gas & Electric Co.

PG&E Corporation is a holding company. The Company’s primary operating subsidiary is Pacific Gas and Electric Company (the Utility), which operates in northern and central California. The Utility is engaged in the sale and delivery of electricity and natural gas to customers. The Utility generates electricity and provides electricity transmission and distribution services throughout its service territory in northern and central California to residential, commercial, industrial, and agricultural customers. The Utility provides bundled services (electricity, transmission and distribution services) to various customers in its service territory. As of December 31, 2016, the Utility owned approximately 18,400 circuit miles of interconnected transmission lines operating at voltages ranging from 60 kilovolt to 500 kilovolt. As of December 31, 2016, the Utility also operated 92 electric transmission substations with a capacity of approximately 64,600 megavolt ampere (MVA).

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