Ameren Corporation (NYSE: AEE) and NiSource (NYSE:NI) are both mid-cap utilities companies, but which is the superior stock? We will compare the two companies based on the strength of their earnings, valuation, dividends, profitability, analyst recommendations, institutional ownership and risk.

Volatility and Risk

Ameren Corporation has a beta of 0.37, indicating that its share price is 63% less volatile than the S&P 500. Comparatively, NiSource has a beta of 0.39, indicating that its share price is 61% less volatile than the S&P 500.

Institutional & Insider Ownership

69.8% of Ameren Corporation shares are held by institutional investors. Comparatively, 82.0% of NiSource shares are held by institutional investors. 0.4% of Ameren Corporation shares are held by insiders. Comparatively, 0.4% of NiSource shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Earnings & Valuation

This table compares Ameren Corporation and NiSource’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Ameren Corporation $6.06 billion 2.41 $2.44 billion $2.86 21.01
NiSource $4.75 billion 1.86 $1.40 billion $0.86 31.52

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

Dividends

Ameren Corporation pays an annual dividend of $1.76 per share and has a dividend yield of 2.9%. NiSource pays an annual dividend of $0.70 per share and has a dividend yield of 2.6%. Ameren Corporation pays out 61.5% of its earnings in the form of a dividend. NiSource pays out 81.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. NiSource has raised its dividend for 3 consecutive years. Ameren Corporation is clearly the better dividend stock, given its higher yield and lower payout ratio.

Profitability

This table compares Ameren Corporation and NiSource’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Ameren Corporation 11.11% 9.57% 2.82%
NiSource 5.96% 9.17% 2.00%

Analyst Ratings

This is a breakdown of current ratings for Ameren Corporation and NiSource, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Ameren Corporation 1 3 0 0 1.75
NiSource 0 5 7 0 2.58

Ameren Corporation presently has a consensus price target of $55.33, suggesting a potential downside of 7.92%. NiSource has a consensus price target of $26.79, suggesting a potential downside of 1.20%. Given NiSource’s stronger consensus rating and higher probable upside, analysts clearly believe NiSource is more favorable than Ameren Corporation.

Summary

Ameren Corporation beats NiSource on 10 of the 17 factors compared between the two stocks.

About Ameren Corporation

Ameren Corporation is a utility holding company. The Company’s subsidiaries include Ameren Missouri, Ameren Illinois and Ameren Transmission Company (ATXI). It operates through four segments. The Ameren Missouri segment includes all of the operations of Ameren Missouri. The Ameren Illinois Electric Distribution segment consists of the electric distribution business of Ameren Illinois. The Ameren Illinois Natural Gas segment consists of the natural gas business of Ameren Illinois. The ATXI segment consists of the aggregated electric transmission businesses of Ameren Illinois and ATXI. Ameren Missouri operates a rate-regulated electric generation, transmission, and distribution business and a rate-regulated natural gas distribution business in Missouri. Ameren Illinois operates rate-regulated electric distribution, electric transmission and natural gas distribution businesses in Illinois. ATXI operates a Federal Energy Regulatory Commission rate-regulated electric transmission business.

About NiSource

NiSource Inc. is an energy holding company. The Company is engaged in the distribution of natural gas. The Company operates through two business segments: Gas Distribution Operations and Electric Operations. The Company’s Gas Distribution Operations segment provides natural gas service and transportation for residential, commercial and industrial customers in Ohio, Pennsylvania, Virginia, Kentucky, Maryland, Indiana and Massachusetts. As of December 31, 2016, the Company’s Electric Operations segment provided electric services in 20 counties in the northern part of Indiana. The Company’s electric operations segment generated, transmitted and distributed electricity through the Company’s subsidiary NIPSCO to approximately 466,000 customers in 20 counties in the northern part of Indiana and engaged in wholesale and transmission transactions, as of December 31, 2016. NIPSCO owned and operated three coal-fired electric generating stations, as of December 31, 2016.

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