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

Analyst Recommendations

This is a summary of current ratings for CenterPoint Energy and Ameren Corporation, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
CenterPoint Energy 0 6 1 0 2.14
Ameren Corporation 1 3 0 0 1.75

CenterPoint Energy currently has a consensus target price of $27.71, suggesting a potential downside of 8.11%. Ameren Corporation has a consensus target price of $55.33, suggesting a potential downside of 7.08%. Given Ameren Corporation’s higher possible upside, analysts clearly believe Ameren Corporation is more favorable than CenterPoint Energy.

Dividends

CenterPoint Energy pays an annual dividend of $1.07 per share and has a dividend yield of 3.5%. Ameren Corporation pays an annual dividend of $1.76 per share and has a dividend yield of 3.0%. 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. Ameren Corporation pays out 61.5% of its earnings in the form of a dividend. CenterPoint Energy has increased its dividend for 11 consecutive years and Ameren Corporation has increased its dividend for 3 consecutive years. CenterPoint Energy is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Risk and Volatility

CenterPoint Energy has a beta of 0.63, meaning that its stock price is 37% less volatile than the S&P 500. Comparatively, Ameren Corporation has a beta of 0.37, meaning that its stock price is 63% less volatile than the S&P 500.

Valuation and Earnings

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

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
CenterPoint Energy $8.85 billion 1.47 $2.08 billion $1.39 21.70
Ameren Corporation $6.06 billion 2.38 $2.44 billion $2.86 20.82

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

Profitability

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

Net Margins Return on Equity Return on Assets
CenterPoint Energy 6.86% 16.45% 2.65%
Ameren Corporation 11.11% 9.57% 2.82%

Insider and Institutional Ownership

76.9% of CenterPoint Energy shares are held by institutional investors. Comparatively, 69.8% of Ameren Corporation shares are held by institutional investors. 0.2% of CenterPoint Energy shares are held by company insiders. Comparatively, 0.4% of Ameren Corporation shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Summary

CenterPoint Energy beats Ameren Corporation on 9 of the 17 factors compared between the two stocks.

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.

Ameren Corporation Company Profile

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.

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