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

Institutional and Insider Ownership

72.1% of Eversource Energy shares are held by institutional investors. Comparatively, 73.3% of Xcel Energy shares are held by institutional investors. 0.5% of Eversource Energy 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 large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Analyst Ratings

This is a summary of recent ratings and recommmendations for Eversource Energy and Xcel Energy, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Eversource Energy 1 5 3 0 2.22
Xcel Energy 0 8 3 0 2.27

Eversource Energy currently has a consensus price target of $64.50, indicating a potential upside of 6.10%. Xcel Energy has a consensus price target of $48.91, indicating a potential upside of 8.37%. Given Xcel Energy’s stronger consensus rating and higher probable upside, analysts clearly believe Xcel Energy is more favorable than Eversource Energy.

Profitability

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

Net Margins Return on Equity Return on Assets
Eversource Energy 12.84% 9.03% 3.01%
Xcel Energy 10.40% 10.63% 2.85%

Dividends

Eversource Energy pays an annual dividend of $1.90 per share and has a dividend yield of 3.1%. Xcel Energy pays an annual dividend of $1.44 per share and has a dividend yield of 3.2%. Eversource Energy pays out 61.7% 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. Eversource Energy has increased its dividend for 14 consecutive years and Xcel Energy has increased its dividend for 2 consecutive years.

Volatility and Risk

Eversource Energy has a beta of 0.31, indicating that its share price is 69% less volatile than the S&P 500. Comparatively, Xcel Energy has a beta of 0.21, indicating that its share price is 79% less volatile than the S&P 500.

Valuation & Earnings

This table compares Eversource Energy and Xcel Energy’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Eversource Energy $7.64 billion 2.52 $942.30 million $3.08 19.74
Xcel Energy $11.11 billion 2.06 $1.12 billion $2.33 19.37

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

Summary

Eversource Energy beats Xcel Energy on 9 of the 16 factors compared between the two stocks.

Eversource Energy Company Profile

Eversource Energy is a utility holding company engaged in the energy delivery business. The Company operates through three segments: electric distribution, electric transmission and natural gas distribution. The Company’s electric distribution segment consists of the distribution businesses, which are engaged in the distribution of electricity to retail customers in Connecticut, Massachusetts, and New Hampshire and the regulated electric generation businesses. Its electric transmission segment owns and maintains transmission facilities that are part of an interstate power transmission grid over which electricity is transmitted throughout New England. Its electric distribution segment consists of the distribution businesses of The Connecticut Light and Power Company (CL&P), NSTAR Electric Company (NSTAR Electric), Public Service Company of New Hampshire (PSNH) and Western Massachusetts Electric Company (WMECO). It also provides water utility services through its subsidiary, Aquarion.

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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