Analyzing ITC (ITC) & Xcel Energy (XEL)

ITC (NYSE: ITC) and Xcel Energy (NYSE:XEL) are both mid-cap electric utilities – nec companies, but which is the better investment? We will contrast the two businesses based on the strength of their earnings, profitability, dividends, risk, valuation, analyst recommendations and institutional ownership.

Dividends

ITC pays an annual dividend of $0.86 per share and has a dividend yield of 1.9%. Xcel Energy pays an annual dividend of $1.44 per share and has a dividend yield of 3.0%. ITC pays out 58.1% of its earnings in the form of a dividend. Xcel Energy pays out 61.8% 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. ITC has raised its dividend for 13 consecutive years and Xcel Energy has raised its dividend for 5 consecutive years.

Insider & Institutional Ownership

84.2% of ITC shares are held by institutional investors. Comparatively, 73.3% of Xcel Energy shares are held by institutional investors. 3.2% of ITC shares are held by company insiders. Comparatively, 0.2% of Xcel Energy 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.

Valuation & Earnings

This table compares ITC and Xcel Energy’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
ITC N/A N/A N/A $1.48 30.74
Xcel Energy $11.11 billion 2.19 $1.12 billion $2.33 20.54

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

Profitability

This table compares ITC and Xcel Energy’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
ITC 27.42% 16.62% 3.79%
Xcel Energy 10.40% 10.63% 2.85%

Analyst Ratings

This is a summary of recent ratings and price targets for ITC and Xcel Energy, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
ITC 0 0 0 0 N/A
Xcel Energy 0 8 3 0 2.27

Xcel Energy has a consensus target price of $49.09, suggesting a potential upside of 2.59%. Given Xcel Energy’s higher possible upside, analysts clearly believe Xcel Energy is more favorable than ITC.

Summary

ITC beats Xcel Energy on 8 of the 13 factors compared between the two stocks.

ITC Company Profile

ITC Holdings Corp. (ITC Holdings) is a holding company. The Company is engaged in owning, operating, maintaining and investing in transmission infrastructure. The Company’s business consists primarily of the electric transmission operations of its Regulated Operating Subsidiaries. Its Regulated Operating Subsidiaries include International Transmission Company (ITCTransmission), Michigan Electric Transmission Company, LLC (METC), ITC Midwest LLC (ITC Midwest). The operations performed by its Regulated Operating Subsidiaries fall into the various categories, such as asset planning; engineering, design and construction; maintenance, and real time operations. Its customers include investor-owned utilities, municipalities, cooperatives, power marketers and alternative energy suppliers. It owns and operates high-voltage systems in Michigan’s Lower Peninsula and portions of Iowa, Minnesota, Illinois, Missouri, Kansas and Oklahoma.

Xcel Energy Company Profile

Xcel Energy Inc. is a public utility holding company. The Company’s operations include the activity of four utility subsidiaries that serve electric and natural gas customers in eight states. The Company’s segments include regulated electric utility, regulated natural gas utility and all other. The Company’s utility subsidiaries include NSP-Minnesota, NSP-Wisconsin, Public Service Company of Colorado (PSCo) and Southwestern Public Service Co. (SPS), which serve customers in portions of Colorado, Michigan, Minnesota, New Mexico, North Dakota, South Dakota, Texas and Wisconsin. Along with WYCO Development LLC (WYCO), a joint venture formed with Colorado Interstate Gas Company, LLC (CIG) to develop and lease natural gas pipelines storage and compression facilities, and WestGas InterState, Inc. (WGI), an interstate natural gas pipeline company, these companies comprise the regulated utility operations.

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