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

Insider & Institutional Ownership

70.3% of Ameren Corporation shares are owned by institutional investors. Comparatively, 67.9% of Avista Corporation shares are owned by institutional investors. 0.4% of Ameren Corporation shares are owned by company insiders. Comparatively, 1.1% of Avista Corporation shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Risk & Volatility

Ameren Corporation has a beta of 0.38, meaning that its share price is 62% less volatile than the S&P 500. Comparatively, Avista Corporation has a beta of 0.44, meaning that its share price is 56% less volatile than the S&P 500.

Profitability

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

Net Margins Return on Equity Return on Assets
Ameren Corporation 10.03% 8.61% 2.51%
Avista Corporation 8.86% 7.94% 2.47%

Dividends

Ameren Corporation pays an annual dividend of $1.76 per share and has a dividend yield of 2.7%. Avista Corporation pays an annual dividend of $1.43 per share and has a dividend yield of 2.8%. Ameren Corporation pays out 69.8% of its earnings in the form of a dividend. Avista Corporation pays out 71.9% 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. Ameren Corporation has increased its dividend for 3 consecutive years and Avista Corporation has increased its dividend for 14 consecutive years. Avista Corporation is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Earnings & Valuation

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

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
Ameren Corporation $6.08 billion 2.56 $653.00 million $2.52 25.42
Avista Corporation $1.44 billion 2.32 $137.22 million $1.99 26.08

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

Analyst Recommendations

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

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Ameren Corporation 1 4 0 0 1.80
Avista Corporation 1 3 0 0 1.75

Ameren Corporation currently has a consensus target price of $57.00, indicating a potential downside of 11.01%. Avista Corporation has a consensus target price of $44.00, indicating a potential downside of 15.21%. Given Ameren Corporation’s stronger consensus rating and higher possible upside, research analysts plainly believe Ameren Corporation is more favorable than Avista Corporation.

Summary

Ameren Corporation beats Avista Corporation on 11 of the 16 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 Avista Corporation

Avista Corporation is an electric and natural gas utility company. The Company operates through two segments: Avista Utilities, and Alaska Electric Light and Power Company (AEL&P). The Company’s regional services include government and higher education, medical services, retail trade and finance. The Company’s businesses also include sheet metal fabrication, venture fund investments, real estate investments, a company that explores markets that could be served with liquefied natural gas (LNG), as well as certain other investments of Avista Capital, which is a subsidiary of the Company. Avista Utilities is an operating division of the Company, which consists of its regulated utility operations in the Pacific Northwest. Avista Utilities division generates, transmits and distributes electricity, and distributes natural gas. As of December 31, 2016, AEL&P operated five hydroelectric generation facilities with 102.7 megawatts (MW) of hydroelectric generation capacity.

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