Sempra Energy (NYSE: SRE) and CenterPoint Energy (NYSE:CNP) are both large-cap utilities companies, but which is the superior business? We will compare the two companies based on the strength of their dividends, valuation, institutional ownership, analyst recommendations, earnings, risk and profitability.

Profitability

This table compares Sempra Energy and CenterPoint Energy’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Sempra Energy 15.51% 9.11% 2.84%
CenterPoint Energy 6.86% 16.45% 2.65%

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for Sempra Energy and CenterPoint Energy, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Sempra Energy 0 2 4 0 2.67
CenterPoint Energy 0 7 1 0 2.13

Sempra Energy presently has a consensus price target of $121.60, suggesting a potential upside of 2.21%. CenterPoint Energy has a consensus price target of $27.57, suggesting a potential downside of 7.97%. Given Sempra Energy’s stronger consensus rating and higher possible upside, analysts clearly believe Sempra Energy is more favorable than CenterPoint Energy.

Risk & Volatility

Sempra Energy has a beta of 0.55, suggesting that its stock price is 45% less volatile than the S&P 500. Comparatively, CenterPoint Energy has a beta of 0.63, suggesting that its stock price is 37% less volatile than the S&P 500.

Valuation and Earnings

This table compares Sempra Energy and CenterPoint Energy’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Sempra Energy $10.97 billion 2.72 $3.71 billion $6.75 17.63
CenterPoint Energy $8.85 billion 1.46 $2.08 billion $1.39 21.55

Sempra Energy has higher revenue and earnings than CenterPoint Energy. Sempra Energy is trading at a lower price-to-earnings ratio than CenterPoint Energy, indicating that it is currently the more affordable of the two stocks.

Dividends

Sempra Energy pays an annual dividend of $3.29 per share and has a dividend yield of 2.8%. CenterPoint Energy pays an annual dividend of $1.07 per share and has a dividend yield of 3.6%. Sempra Energy pays out 48.7% of its earnings in the form of a dividend. CenterPoint Energy pays out 77.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Sempra Energy has raised its dividend for 6 consecutive years and CenterPoint Energy has raised its dividend for 11 consecutive years. CenterPoint Energy is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Insider and Institutional Ownership

81.2% of Sempra Energy shares are held by institutional investors. Comparatively, 76.9% of CenterPoint Energy shares are held by institutional investors. 0.2% of Sempra Energy shares are held by insiders. Comparatively, 0.2% of CenterPoint Energy shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Summary

Sempra Energy beats CenterPoint Energy on 11 of the 17 factors compared between the two stocks.

Sempra Energy Company Profile

Sempra Energy is a holding company. The Company’s principal operating units are Sempra Utilities, which includes its San Diego Gas & Electric Company (SDG&E), Southern California Gas Company (SoCalGas) and Sempra South American Utilities segments, and Sempra Infrastructure, which includes its Sempra Mexico, Sempra Renewables and Sempra LNG & Midstream segments. As of December 31, 2016, SDG&E’s service area covered 4,100 square miles. Sempra South American Utilities operates Chilquinta Energia, which serves customers in the region of Valparaiso in central Chile. As of December 31, 2016, SoCalGas had natural gas franchises with the 12 counties and the 223 cities in its service territory. Sempra LNG & Midstream owns land in Simpson County, Mississippi Hub. Sempra LNG & Midstream owns land in Port Arthur, Texas. Sempra Renewables has operations, investments or development projects in the various United States markets.

CenterPoint Energy Company Profile

CenterPoint Energy, Inc. is a public utility holding company. The Company, through its subsidiaries, owns and operates electric transmission and distribution facilities, and natural gas distribution facilities. The Electric Transmission & Distribution segment provides electric transmission and distribution services to retail electric providers. Its Natural Gas Distribution segment offers intrastate natural gas sales to and natural gas transportation and distribution for residential, commercial and industrial customers. Its Energy Services segment includes non-rate regulated gas sales and transportation and storage services for commercial and industrial customers. Its Midstream Investments segment includes equity investment in Enable that owns, operates and develops natural gas and crude oil assets. Its Other Operations segment includes office buildings and other real estate used in its business operations and other corporate operations.

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