FirstEnergy (NYSE: FE) and Pepco (NYSE:POM) are both utilities companies, but which is the better business? We will compare the two businesses based on the strength of their analyst recommendations, profitability, dividends, valuation, risk, earnings and institutional ownership.
FirstEnergy pays an annual dividend of $1.44 per share and has a dividend yield of 4.4%. Pepco pays an annual dividend of $1.08 per share and has a dividend yield of 4.0%. FirstEnergy pays out -37.2% of its earnings in the form of a dividend. Pepco pays out 86.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. FirstEnergy is clearly the better dividend stock, given its higher yield and lower payout ratio.
This table compares FirstEnergy and Pepco’s top-line revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|FirstEnergy||$14.02 billion||1.11||-$1.72 billion||($3.87)||-8.45|
Pepco has lower revenue, but higher earnings than FirstEnergy. FirstEnergy is trading at a lower price-to-earnings ratio than Pepco, indicating that it is currently the more affordable of the two stocks.
This table compares FirstEnergy and Pepco’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
Insider & Institutional Ownership
78.8% of FirstEnergy shares are owned by institutional investors. 0.3% of FirstEnergy shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.
This is a summary of recent ratings and recommmendations for FirstEnergy and Pepco, as reported by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
FirstEnergy currently has a consensus target price of $35.08, suggesting a potential upside of 7.29%. Given FirstEnergy’s higher possible upside, analysts plainly believe FirstEnergy is more favorable than Pepco.
FirstEnergy beats Pepco on 9 of the 12 factors compared between the two stocks.
FirstEnergy Corp. is a holding company. The Company is engaged in holding, directly or indirectly, all of the outstanding equity of its principal subsidiaries. Its segments include Regulated Distribution, Regulated Transmission, Competitive Energy Services (CES) and Corporate/Other. As of December 31, 2016, the Regulated Distribution segment distributed electricity through the Company’s 10 utility operating companies, serving approximately six million customers, and purchased power for its provider of last resort (POLR), standard offer service (SOS), standard offer service (SSO) and default service requirements in Ohio, Pennsylvania, New Jersey and Maryland. The Regulated Transmission segment transmits electricity through transmission facilities owned and operated by American Transmission Systems, Incorporated (ATSI) and Trans-Allegheny Interstate Line Company (TrAIL). The CES segment primarily supplies electricity to end use customers through retail and wholesale arrangements.
Pepco Holdings LLC, formerly Pepco Holdings, Inc., is a holding company. The Company, through its utility subsidiaries, is engaged in the transmission, distribution and default supply of electricity, and the distribution and supply of natural gas. The Company’s segments include Power Delivery, Pepco Energy Services, and Corporate and Other. The Company’s subsidiaries include Potomac Electric Power Company (Pepco), Delmarva Power & Light Company (DPL) and Atlantic City Electric Company (ACE). Pepco is engaged in the transmission, distribution and default supply of electricity. DPL is involved in the transmission, distribution and default supply of electricity, and distribution and supply of natural gas. ACE is engaged in the transmission, distribution and default supply of electricity. The Company’s subsidiaries own and operate a network of wires, substations and other equipment that are classified as transmission facilities, distribution facilities or common facilities.
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