Contrasting Pinnacle West Capital (PNW) and Vistra Energy (VST)

Pinnacle West Capital (NYSE: PNW) and Vistra Energy (NYSE:VST) are both mid-cap electric utilities – nec companies, but which is the superior investment? We will contrast the two companies based on the strength of their profitability, dividends, risk, earnings, institutional ownership, analyst recommendations and valuation.

Dividends

Pinnacle West Capital pays an annual dividend of $2.78 per share and has a dividend yield of 3.5%. Vistra Energy does not pay a dividend. Pinnacle West Capital pays out 60.0% of its earnings in the form of a dividend. Vistra Energy has increased its dividend for 6 consecutive years.

Institutional & Insider Ownership

82.7% of Pinnacle West Capital shares are held by institutional investors. 0.7% of Pinnacle West Capital 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 and Earnings

This table compares Pinnacle West Capital and Vistra Energy’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Pinnacle West Capital $3.50 billion 2.53 $442.03 million $4.63 17.08
Vistra Energy $5.16 billion 1.62 $22.69 billion $55.35 0.35

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

Analyst Ratings

This is a summary of current ratings and recommmendations for Pinnacle West Capital and Vistra Energy, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Pinnacle West Capital 2 7 0 0 1.78
Vistra Energy 0 2 9 0 2.82

Pinnacle West Capital presently has a consensus price target of $85.63, suggesting a potential upside of 8.28%. Vistra Energy has a consensus price target of $20.45, suggesting a potential upside of 4.93%. Given Pinnacle West Capital’s higher possible upside, equities analysts plainly believe Pinnacle West Capital is more favorable than Vistra Energy.

Profitability

This table compares Pinnacle West Capital and Vistra Energy’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Pinnacle West Capital 14.67% 10.31% 3.16%
Vistra Energy 416.84% 352.77% 158.86%

Summary

Vistra Energy beats Pinnacle West Capital on 10 of the 16 factors compared between the two stocks.

About Pinnacle West Capital

Pinnacle West Capital Corporation is a holding company that operates through its subsidiaries. The Company operates through regulated electricity segment, which consists of traditional regulated retail and wholesale electricity businesses and related activities, and includes electricity generation, transmission and distribution. It owned and leased 6,236 megawatt (MW) of regulated generation capacity and the Company held a mix of both long-term and short-term purchased power agreements for additional capacity, including agreements for the purchase of renewable energy, as of December 31, 2016. Its subsidiaries include Arizona Public Service Company, which is a vertically-integrated electric utility that provides retail or wholesale electric service to the State of Arizona, with the exceptions of about one-half of the Phoenix metropolitan area, the Tucson metropolitan area and Mohave County in northwestern Arizona.

About Vistra Energy

Vistra Energy Corp, formerly TCEH Corp. is a holding company. The Company is an energy company, which is focused on energy and power generation markets through operation as a generator and retailer of electricity in Texas market. Its portfolio of businesses consists primarily of Luminant and TXU Energy. It is engaged in electricity market activities in Texas, including electricity generation, wholesale energy sales and purchases, commodity risk management activities and retail electricity operations. Luminant generates and sells electricity and related products from its fleet of generation facilities totaling approximately 17,000 megawatts of generation in Texas, including 2,300 megawatts fueled by nuclear power, 8,000 megawatts fueled by coal and 6,000 megawatts fueled by natural gas. The Company is a purchaser of wind-generated electricity. TXU Energy sells retail electricity and services to approximately 1.7 million residential and business customers in Texas.

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