Cleco Corporate (CNL) & PNM Resources (PNM) Head-To-Head Analysis

Cleco Corporate (NYSE: CNL) and PNM Resources (NYSE:PNM) are both mid-cap utilities companies, but which is the better investment? We will contrast the two businesses based on the strength of their earnings, valuation, dividends, profitability, risk, analyst recommendations and institutional ownership.

Profitability

This table compares Cleco Corporate and PNM Resources’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Cleco Corporate 13.38% 8.95% 2.84%
PNM Resources 11.27% 9.18% 2.49%

Earnings & Valuation

This table compares Cleco Corporate and PNM Resources’ gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Cleco Corporate N/A N/A N/A $2.20 25.17
PNM Resources $1.36 billion 2.05 $117.37 million $1.98 17.68

PNM Resources has higher revenue and earnings than Cleco Corporate. PNM Resources is trading at a lower price-to-earnings ratio than Cleco Corporate, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a summary of recent ratings and target prices for Cleco Corporate and PNM Resources, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Cleco Corporate 0 0 0 0 N/A
PNM Resources 3 8 1 0 1.83

PNM Resources has a consensus price target of $38.99, indicating a potential upside of 11.40%. Given PNM Resources’ higher possible upside, analysts plainly believe PNM Resources is more favorable than Cleco Corporate.

Risk and Volatility

Cleco Corporate has a beta of 0.53, indicating that its share price is 47% less volatile than the S&P 500. Comparatively, PNM Resources has a beta of 0.26, indicating that its share price is 74% less volatile than the S&P 500.

Dividends

Cleco Corporate pays an annual dividend of $1.60 per share and has a dividend yield of 2.9%. PNM Resources pays an annual dividend of $1.06 per share and has a dividend yield of 3.0%. Cleco Corporate pays out 72.7% of its earnings in the form of a dividend. PNM Resources pays out 53.5% 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. Cleco Corporate has increased its dividend for 6 consecutive years and PNM Resources has increased its dividend for 8 consecutive years. PNM Resources is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Insider and Institutional Ownership

92.4% of PNM Resources shares are held by institutional investors. 1.3% of PNM Resources shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Summary

PNM Resources beats Cleco Corporate on 9 of the 14 factors compared between the two stocks.

About Cleco Corporate

Cleco Corporate Holdings LLC, formerly Cleco Corporation, is a public utility holding company. The Company’s segments include Cleco Power and Other. Cleco Power is a regulated electric utility company that owns over 10 generating units with a total nameplate capacity of approximately 3,330 megawatts (MW) and serves approximately 287,000 customers in Louisiana through its retail business and supplies wholesale power in Louisiana and Mississippi. The Company, through its subsidiaries, owns one transmission substation in Louisiana and one transmission substation in Mississippi. Cleco Power is engaged in the generation, transmission, distribution and sale of electricity within Louisiana. It owns natural gas pipelines and interconnections at all of its generating facilities, which allow it to access various natural gas supply markets and maintain an economical fuel supply for its customers. The Company holds investments in its subsidiary, Cleco Power LLC (Cleco Power).

About PNM Resources

PNM Resources, Inc. (PNMR) is an investor-owned holding company with approximately two regulated utilities providing electricity and electric services in New Mexico and Texas. PNMR’s electric utilities are Public Service Company of New Mexico (PNM) and Texas-New Mexico Power Company (TNMP). It operates in three segments: PNM, TNMP, and Corporate and Other. The Company, through its Website provides information, including news releases, notices of Webcasts, and filings. PNM is an electric utility that provides electric generation, transmission and distribution service to its rate-regulated customers. TNMP is a regulated utility operating in Texas. TNMP provides transmission and distribution services in Texas under the provisions of Texas Electric Choice Act (TECA) and the Texas Public Utility Regulatory Act. The Corporate and Other segment includes PNMR holding company activities, related to corporate level debt and PNMR Services Company.

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