Head to Head Survey: Companhia Paranaense de Energia (ELP) and Pinnacle West Capital (PNW)

Companhia Paranaense de Energia (NYSE: ELP) and Pinnacle West Capital (NYSE:PNW) are both utilities companies, but which is the better investment? We will compare the two businesses based on the strength of their profitability, valuation, dividends, institutional ownership, earnings, risk and analyst recommendations.

Valuation & Earnings

This table compares Companhia Paranaense de Energia and Pinnacle West Capital’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Companhia Paranaense de Energia $3.78 billion 0.52 $274.84 million $0.99 7.23
Pinnacle West Capital $3.50 billion 2.52 $442.03 million $4.63 17.05

Pinnacle West Capital has lower revenue, but higher earnings than Companhia Paranaense de Energia. Companhia Paranaense de Energia 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.

Profitability

This table compares Companhia Paranaense de Energia and Pinnacle West Capital’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Companhia Paranaense de Energia 6.46% 5.70% 2.78%
Pinnacle West Capital 14.67% 10.31% 3.16%

Dividends

Companhia Paranaense de Energia pays an annual dividend of $0.52 per share and has a dividend yield of 7.3%. Pinnacle West Capital pays an annual dividend of $2.78 per share and has a dividend yield of 3.5%. Companhia Paranaense de Energia pays out 52.5% of its earnings in the form of a dividend. Pinnacle West Capital pays out 60.0% 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. Pinnacle West Capital has increased its dividend for 6 consecutive years. Companhia Paranaense de Energia is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Ratings

This is a summary of current recommendations and price targets for Companhia Paranaense de Energia and Pinnacle West Capital, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Companhia Paranaense de Energia 0 0 1 0 3.00
Pinnacle West Capital 2 7 0 0 1.78

Pinnacle West Capital has a consensus target price of $85.88, suggesting a potential upside of 8.76%. Given Pinnacle West Capital’s higher probable upside, analysts plainly believe Pinnacle West Capital is more favorable than Companhia Paranaense de Energia.

Volatility and Risk

Companhia Paranaense de Energia has a beta of 1.52, indicating that its share price is 52% more volatile than the S&P 500. Comparatively, Pinnacle West Capital has a beta of 0.38, indicating that its share price is 62% less volatile than the S&P 500.

Institutional and Insider Ownership

2.0% of Companhia Paranaense de Energia shares are owned by institutional investors. Comparatively, 82.6% of Pinnacle West Capital shares are owned by institutional investors. 0.7% of Pinnacle West Capital shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Summary

Pinnacle West Capital beats Companhia Paranaense de Energia on 11 of the 17 factors compared between the two stocks.

Companhia Paranaense de Energia Company Profile

Companhia Paranaense de Energia is engaged in the generation, transmission, distribution and sale of electricity in the Brazilian State of Parana. The Company also provides telecommunications and other services. Its segments are Power generation and transmission (GET), Power distribution and sales (DIS), Telecommunications (TEL), GAS and Holding Company (HOL). The GET segment includes the generation of electric energy from hydraulic, wind and thermal projects; the transport and transformation of the power generated by the Company, and the construction, operation and maintenance of all power transmission substations and lines. The DIS segment includes the distribution and sale of electric energy, and the operation and maintenance of the distribution infrastructure. The TEL segment includes telecommunications and general communications services. The GAS segment includes the public service of piped natural gas distribution. The HOL segment includes participation in other companies.

Pinnacle West Capital Company Profile

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.

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