Public Service Enterprise Group (NYSE: PEG) and Southern Company (The) (NYSE:SO) are both large-cap utilities companies, but which is the superior investment? We will contrast the two companies based on the strength of their earnings, profitability, dividends, institutional ownership, valuation, analyst recommendations and risk.

Dividends

Public Service Enterprise Group pays an annual dividend of $1.72 per share and has a dividend yield of 3.6%. Southern Company (The) pays an annual dividend of $2.32 per share and has a dividend yield of 4.7%. Public Service Enterprise Group pays out 193.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Southern Company (The) pays out 346.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Public Service Enterprise Group has raised its dividend for 5 consecutive years and Southern Company (The) has raised its dividend for 15 consecutive years. Southern Company (The) is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Ratings

This is a summary of recent ratings and recommmendations for Public Service Enterprise Group and Southern Company (The), as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Public Service Enterprise Group 0 4 8 0 2.67
Southern Company (The) 2 4 8 0 2.43

Public Service Enterprise Group currently has a consensus target price of $48.85, suggesting a potential upside of 2.95%. Southern Company (The) has a consensus target price of $48.90, suggesting a potential downside of 0.94%. Given Public Service Enterprise Group’s stronger consensus rating and higher probable upside, analysts clearly believe Public Service Enterprise Group is more favorable than Southern Company (The).

Profitability

This table compares Public Service Enterprise Group and Southern Company (The)’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Public Service Enterprise Group 4.88% 11.46% 3.77%
Southern Company (The) 2.93% 11.30% 2.64%

Earnings and Valuation

This table compares Public Service Enterprise Group and Southern Company (The)’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Public Service Enterprise Group $9.27 billion 2.59 $3.60 billion $0.89 53.32
Southern Company (The) $22.65 billion 2.18 $5.63 billion $0.67 73.67

Southern Company (The) has higher revenue and earnings than Public Service Enterprise Group. Public Service Enterprise Group is trading at a lower price-to-earnings ratio than Southern Company (The), indicating that it is currently the more affordable of the two stocks.

Institutional and Insider Ownership

65.9% of Public Service Enterprise Group shares are owned by institutional investors. Comparatively, 53.3% of Southern Company (The) shares are owned by institutional investors. 0.6% of Public Service Enterprise Group shares are owned by company insiders. Comparatively, 1.0% of Southern Company (The) shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Risk and Volatility

Public Service Enterprise Group has a beta of 0.38, indicating that its stock price is 62% less volatile than the S&P 500. Comparatively, Southern Company (The) has a beta of 0.13, indicating that its stock price is 87% less volatile than the S&P 500.

Summary

Public Service Enterprise Group beats Southern Company (The) on 10 of the 16 factors compared between the two stocks.

About Public Service Enterprise Group

Public Service Enterprise Group Incorporated (PSEG) is a holding company. The Company is an energy company with operations located primarily in the Northeastern and Mid-Atlantic United States. The Company’s segments include Public Service Electric and Gas Company (PSE&G), PSEG Power LLC (Power) and Other. PSEG is engaged in the transmission of electricity and distribution of electricity and natural gas in certain areas of New Jersey. PSE&G is also the provider of last resort for gas and electric commodity service for end users in its service territory. Power is a multi-regional energy supply company that integrates the operations of its merchant nuclear and fossil generating assets with its power marketing businesses through energy sales in energy markets and fuel supply functions primarily in the Northeast and Mid-Atlantic United States through its principal subsidiaries. In addition, Power owns and operates solar generation in various states.

About Southern Company (The)

The Southern Company (Southern Company) is a holding company. The Company owns all of the stock of the traditional electric operating companies and the parent entities of Southern Power Company (Southern Power) and Southern Company Gas, and owns other direct and indirect subsidiaries. The Company’s segments include Gas distribution operations, Gas marketing services, Wholesale gas services, Gas midstream operations and All other. The Gas distribution operations segment includes natural gas local distribution utilities that construct, manage, and maintain intrastate natural gas pipelines and gas distribution facilities in seven states. The Gas marketing services segment provides natural gas commodity and related services to customers markets that provide for customer choice. The Wholesale gas services segment engages in natural gas storage and gas pipeline arbitrage. The Gas midstream operations consist primarily of gas pipeline investments, with storage and fuels.

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