Summer Energy (SUME) and TransAlta (TAC) Critical Review

Summer Energy (OTCMKTS:SUME) and TransAlta (NYSE:TAC) are both small-cap utilities companies, but which is the better stock? We will compare the two companies based on the strength of their institutional ownership, risk, valuation, dividends, analyst recommendations, earnings and profitability.

Analyst Recommendations

This is a breakdown of recent ratings for Summer Energy and TransAlta, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Summer Energy 0 0 0 0 N/A
TransAlta 0 2 1 0 2.33

Insider & Institutional Ownership

0.2% of Summer Energy shares are held by institutional investors. Comparatively, 52.5% of TransAlta shares are held by institutional investors. 63.2% of Summer Energy shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Risk and Volatility

Summer Energy has a beta of 0.63, suggesting that its share price is 37% less volatile than the S&P 500. Comparatively, TransAlta has a beta of 0.66, suggesting that its share price is 34% less volatile than the S&P 500.

Valuation and Earnings

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

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Summer Energy $117.68 million 0.46 $1.26 million N/A N/A
TransAlta $1.78 billion 0.85 -$123.42 million ($0.18) -29.44

Summer Energy has higher earnings, but lower revenue than TransAlta.

Dividends

TransAlta pays an annual dividend of $0.12 per share and has a dividend yield of 2.3%. Summer Energy does not pay a dividend. TransAlta pays out -66.7% of its earnings in the form of a dividend.

Profitability

This table compares Summer Energy and TransAlta’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Summer Energy -4.32% -47.53% -12.70%
TransAlta -10.56% -2.45% -0.86%

Summary

TransAlta beats Summer Energy on 9 of the 12 factors compared between the two stocks.

Summer Energy Company Profile

Summer Energy Holdings, Inc., through its subsidiaries, operates as a retail electric service provider in Texas, Massachusetts, Rhode Island, and New Hampshire. The company procures wholesale energy and resells to commercial and residential customers. Summer Energy Holdings, Inc. was founded in 2011 and is headquartered in Houston, Texas.

TransAlta Company Profile

TransAlta Corporation operates as non-regulated electricity generation and energy marketing company in Canada, the United States, and Western Australia. The company operates through eight segments: Canadian Coal, U.S. Coal, Canadian Gas, Australian Gas, Wind and Solar, Hydro, Energy Marketing, and Corporate. It generates and markets electricity through various generation facilities. The company has an aggregate net ownership interest of approximately 8,546 megawatts of generating capacity. TransAlta Corporation was founded in 1909 and is headquartered in Calgary, Canada.

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