Analyzing PPL Corporation (PPL) & CMS Energy Corporation (CMS)
PPL Corporation (NYSE: PPL) and CMS Energy Corporation (NYSE:CMS) are both large-cap utilities companies, but which is the superior investment? We will contrast the two businesses based on the strength of their earnings, risk, valuation, institutional ownership, profitability, dividends and analyst recommendations.
This table compares PPL Corporation and CMS Energy Corporation’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|CMS Energy Corporation||8.52%||12.98%||2.64%|
PPL Corporation pays an annual dividend of $1.58 per share and has a dividend yield of 4.0%. CMS Energy Corporation pays an annual dividend of $1.33 per share and has a dividend yield of 2.8%. PPL Corporation pays out 66.1% of its earnings in the form of a dividend. CMS Energy Corporation pays out 66.8% 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. PPL Corporation has raised its dividend for 5 consecutive years and CMS Energy Corporation has raised its dividend for 5 consecutive years. PPL Corporation is clearly the better dividend stock, given its higher yield and lower payout ratio.
Earnings & Valuation
This table compares PPL Corporation and CMS Energy Corporation’s gross revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|PPL Corporation||$7.40 billion||3.62||$4.04 billion||$2.39||16.34|
|CMS Energy Corporation||$6.51 billion||2.08||$2.06 billion||$1.99||24.13|
PPL Corporation has higher revenue and earnings than CMS Energy Corporation. PPL Corporation is trading at a lower price-to-earnings ratio than CMS Energy Corporation, indicating that it is currently the more affordable of the two stocks.
Institutional & Insider Ownership
71.0% of PPL Corporation shares are held by institutional investors. Comparatively, 85.9% of CMS Energy Corporation shares are held by institutional investors. 0.4% of PPL Corporation shares are held by company insiders. Comparatively, 0.7% of CMS Energy Corporation shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.
This is a breakdown of recent recommendations for PPL Corporation and CMS Energy Corporation, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|CMS Energy Corporation||0||4||4||0||2.50|
PPL Corporation currently has a consensus target price of $38.36, indicating a potential downside of 1.77%. CMS Energy Corporation has a consensus target price of $47.71, indicating a potential downside of 0.62%. Given CMS Energy Corporation’s stronger consensus rating and higher probable upside, analysts plainly believe CMS Energy Corporation is more favorable than PPL Corporation.
Risk and Volatility
PPL Corporation has a beta of 0.49, suggesting that its share price is 51% less volatile than the S&P 500. Comparatively, CMS Energy Corporation has a beta of 0.16, suggesting that its share price is 84% less volatile than the S&P 500.
PPL Corporation beats CMS Energy Corporation on 10 of the 16 factors compared between the two stocks.
About PPL Corporation
PPL Corporation (PPL) is a utility holding company. Through its subsidiaries, PPL delivers electricity to customers in the United Kingdom, Pennsylvania, Kentucky, Virginia and Tennessee; delivers natural gas to customers in Kentucky, and generates electricity from power plants in Kentucky. PPL operates through U.K. Regulated Segment, Kentucky Regulated Segment and Pennsylvania Regulated Segment. The U.K. Regulated Segment consists of PPL Global, which includes PPL WPD Limited’s (WPD) regulated electricity distribution operations, the results of hedging the translation of WPD’s earnings from British pound sterling into United States dollars, and certain costs, such as the United States income taxes, administrative costs and allocated financing costs. Kentucky Regulated segment consists of the operations of Louisville Gas and Electric Company (LG&E) and KU Energy LLC (LKE). The Pennsylvania Regulated segment consists of PPL Electric Utilities Corporation (PPL Electric).
About CMS Energy Corporation
CMS Energy Corporation is an energy company operating primarily in Michigan. The Company operates through three segments: electric utility, which consists of regulated activities associated with the generation, transmission and distribution of electricity in Michigan; gas utility, which consists of regulated activities associated with the transportation, storage and distribution of natural gas in Michigan, and enterprises, which consists of various subsidiaries engaging primarily in domestic independent power production. The Company is the parent holding company of various subsidiaries, including Consumers Energy Company (Consumers), an electric and gas utility company, and CMS Enterprises Company (CMS Enterprises), a domestic independent power producer. Consumers serves individuals and businesses operating in the alternative energy, automotive, chemical, metal, and food products industries, as well as a group of other industries.
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