Financial Review: Enel Generacion Chile (EOCC) versus AES (AES)

Enel Generacion Chile (NYSE: EOCC) and AES (NYSE:AES) are both mid-cap utilities companies, but which is the better investment? We will contrast the two companies based on the strength of their dividends, institutional ownership, earnings, analyst recommendations, valuation, profitability and risk.

Insider & Institutional Ownership

2.4% of Enel Generacion Chile shares are owned by institutional investors. Comparatively, 90.4% of AES shares are owned by institutional investors. 1.1% of AES shares are owned 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.

Volatility & Risk

Enel Generacion Chile has a beta of 0.78, meaning that its stock price is 22% less volatile than the S&P 500. Comparatively, AES has a beta of 1.26, meaning that its stock price is 26% more volatile than the S&P 500.

Dividends

Enel Generacion Chile pays an annual dividend of $1.06 per share and has a dividend yield of 3.8%. AES pays an annual dividend of $0.52 per share and has a dividend yield of 5.0%. AES pays out -44.4% of its earnings in the form of a dividend. AES has increased its dividend for 5 consecutive years. AES is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Ratings

This is a summary of recent ratings and target prices for Enel Generacion Chile and AES, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Enel Generacion Chile 2 0 0 0 1.00
AES 0 3 2 0 2.40

Enel Generacion Chile currently has a consensus price target of $24.20, indicating a potential downside of 13.57%. AES has a consensus price target of $12.63, indicating a potential upside of 22.45%. Given AES’s stronger consensus rating and higher possible upside, analysts clearly believe AES is more favorable than Enel Generacion Chile.

Valuation & Earnings

This table compares Enel Generacion Chile and AES’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Enel Generacion Chile $2.46 billion 3.11 $614.32 million N/A N/A
AES $13.59 billion 0.50 -$1.13 billion ($1.17) -8.80

Enel Generacion Chile has higher earnings, but lower revenue than AES.

Profitability

This table compares Enel Generacion Chile and AES’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Enel Generacion Chile N/A N/A N/A
AES -5.43% 15.14% 2.47%

Summary

AES beats Enel Generacion Chile on 12 of the 15 factors compared between the two stocks.

Enel Generacion Chile Company Profile

Enel Generacion Chile SA, formerly Empresa Nacional De Electricidad SA, is a Chile-based company engaged in the business of electricity generation. The Company operates in Chile. The Company owns and operates a total of approximately 111-generation units in Chile both directly and through its subsidiaries, Pehuenche, Celta and GasAtacama. Of these generation units, approximately 38 are hydroelectric, with a total installed capacity of over 3,470 megawatts. There are approximately 22 thermal generation units that operate with gas, coal or oil with a total installed capacity of over 2,808 megawatts. There are over 51 wind powered generation units with an aggregate installed capacity of approximately 78 megawatts. The Company’s subsidiaries include Compania Electrica San Isidro S.A. (San Isidro), Compania Electrica Tarapaca S.A. (Celta), Empresa Electrica Pehuenche S.A. (Pehuenche) and GasAtacama S.A (GasAtacama). It is controlled by Enel Chile SA.

AES Company Profile

The AES Corporation is a holding company. The Company, through its subsidiaries and affiliates, operates a diversified portfolio of electricity generation and distribution businesses. It is organized into six strategic business units (SBUs): the United States; Andes; Brazil; Mexico, Central America and the Caribbean (MCAC); Europe, and Asia. As of December 31, 2016, its United States SBU had 18 generation facilities and two integrated utilities in the United States. As of December 31, 2016, its Andes SBU had generation facilities in three countries. Its Brazil SBU has generation and distribution businesses, Eletropaulo and Tiete. As of December 31, 2016, its MCAC SBU had a portfolio of distribution businesses and generation facilities, including renewable energy, in five countries. As of December 31, 2016, its Europe SBU had generation facilities in five countries. As of December 31, 2016, its Asia SBU had generation facilities in three countries.

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