American Electric Power (NYSE: AEP) and TECO Energy (NYSE:TE) are both mid-cap utilities companies, but which is the better stock? We will compare the two businesses based on the strength of their earnings, institutional ownership, dividends, valuation, analyst recommendations, profitability and risk.
Earnings and Valuation
This table compares American Electric Power and TECO Energy’s top-line revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|American Electric Power||$16.40 billion||2.03||$610.90 million||$3.83||17.70|
This table compares American Electric Power and TECO Energy’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|American Electric Power||12.21%||9.67%||2.73%|
This is a breakdown of recent ratings and recommmendations for American Electric Power and TECO Energy, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|American Electric Power||1||4||8||0||2.54|
American Electric Power presently has a consensus target price of $75.33, suggesting a potential upside of 11.11%. Given American Electric Power’s higher possible upside, equities analysts clearly believe American Electric Power is more favorable than TECO Energy.
Insider and Institutional Ownership
71.1% of American Electric Power shares are held by institutional investors. 0.2% of American Electric Power shares are held 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.
American Electric Power pays an annual dividend of $2.48 per share and has a dividend yield of 3.7%. TECO Energy pays an annual dividend of $0.92 per share and has a dividend yield of 3.3%. American Electric Power pays out 64.8% of its earnings in the form of a dividend. TECO Energy pays out 86.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. American Electric Power has increased its dividend for 3 consecutive years and TECO Energy has increased its dividend for 5 consecutive years. American Electric Power is clearly the better dividend stock, given its higher yield and lower payout ratio.
American Electric Power beats TECO Energy on 11 of the 13 factors compared between the two stocks.
About American Electric Power
American Electric Power Company, Inc. (AEP) is a public utility holding company that owns, directly or indirectly, all of the outstanding common stock of its public utility subsidiaries and varying percentages of other subsidiaries. The service areas of the Company’s public utility subsidiaries cover the states of Arkansas, Indiana, Kentucky, Louisiana, Michigan, Ohio, Oklahoma, Tennessee, Texas, Virginia and West Virginia. The Company’s segments include Vertically Integrated Utilities, Transmission and Distribution Utilities, AEP Transmission Holdco, and Generation & Marketing. AEP’s vertically integrated utility operations are engaged in the generation, transmission and distribution of electricity for sale to retail and wholesale customers. Transmission and Distribution Utilities segment consists of the transmission and distribution of electricity for sale to retail and wholesale customers. AEP Transmission Holdco develops, constructs and operates transmission facilities.
About TECO Energy
TECO Energy, Inc. (TECO Energy) is a holding company for regulated utilities and other businesses. TECO Energy holds all of the common stock of Tampa Electric Company (TEC) and through its subsidiary, New Mexico Gas Intermediate, Inc. (NMGI), owns New Mexico Gas Company, Inc. (NMGC). The Company’s segments include Tampa Electric, Peoples Gas System (PGS) and NMGC. Its Tampa Electric division is engaged in the generation, purchase, transmission, distribution and sale of electric energy. The retail territory served comprises an area of approximately 2,000 square miles in West Central Florida. PGS, the gas division of TEC, is engaged in the purchase, distribution and sale of natural gas for residential, commercial, industrial and electric power generation customers in the state of Florida. NMGC is engaged in the purchase, distribution and sale of natural gas for residential, commercial and industrial customers in the state of New Mexico.
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