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

Analyst Ratings

This is a summary of current ratings for Sempra Energy and Ameren Corporation, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Sempra Energy 0 3 6 0 2.67
Ameren Corporation 1 4 0 0 1.80

Given Sempra Energy’s stronger consensus rating and higher probable upside, research analysts plainly believe Sempra Energy is more favorable than Ameren Corporation.

Insider & Institutional Ownership

80.6% of Sempra Energy shares are owned by institutional investors. Comparatively, 71.0% of Ameren Corporation shares are owned by institutional investors. 0.2% of Sempra Energy shares are owned by insiders. Comparatively, 0.4% of Ameren Corporation shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Valuation and Earnings

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

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
Sempra Energy $10,183.00 2.90 $1,371.00 $4.51 26.12
Ameren Corporation $6,076.00 2.49 $653.00 $2.86 21.79

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

Profitability

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

Net Margins Return on Equity Return on Assets
Sempra Energy 10.22% 8.81% 2.79%
Ameren Corporation 11.11% 9.57% 2.82%

Dividends

Sempra Energy pays an annual dividend of $3.29 per share and has a dividend yield of 2.8%. Ameren Corporation pays an annual dividend of $1.76 per share and has a dividend yield of 2.8%. Sempra Energy pays out 72.9% of its earnings in the form of a dividend. Ameren Corporation pays out 61.5% 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. Sempra Energy has raised its dividend for 6 consecutive years and Ameren Corporation has raised its dividend for 3 consecutive years. Ameren Corporation is clearly the better dividend stock, given its higher yield and lower payout ratio.

Volatility & Risk

Sempra Energy has a beta of 0.62, meaning that its stock price is 38% less volatile than the S&P 500. Comparatively, Ameren Corporation has a beta of 0.38, meaning that its stock price is 62% less volatile than the S&P 500.

Summary

Sempra Energy beats Ameren Corporation on 10 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.

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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