Head-To-Head Contrast: Fortis (NYSE:FTS) vs. Duke Energy (NYSE:DUK)

Fortis (NYSE:FTS) and Duke Energy (NYSE:DUK) are both large-cap utilities companies, but which is the better business? We will contrast the two businesses based on the strength of their profitability, dividends, institutional ownership, earnings, valuation, risk and analyst recommendations.

Valuation & Earnings

This table compares Fortis and Duke Energy”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Fortis	$8.40 billion	3.07	$1.23 billion	$2.40	21.23
Duke Energy	$30.36 billion	3.02	$4.52 billion	$6.36	18.55

Duke Energy has higher revenue and earnings than Fortis. Duke Energy is trading at a lower price-to-earnings ratio than Fortis, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Fortis and Duke Energy’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Fortis	14.18%	7.05%	2.32%
Duke Energy	15.76%	9.98%	2.69%

Insider & Institutional Ownership

57.8% of Fortis shares are owned by institutional investors. Comparatively, 65.3% of Duke Energy shares are owned by institutional investors. 0.1% of Duke Energy shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Dividends

Fortis pays an annual dividend of $1.82 per share and has a dividend yield of 3.6%. Duke Energy pays an annual dividend of $4.26 per share and has a dividend yield of 3.6%. Fortis pays out 75.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Duke Energy pays out 67.0% of its earnings in the form of a dividend. Fortis has increased its dividend for 5 consecutive years and Duke Energy has increased its dividend for 20 consecutive years. Duke Energy is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Risk and Volatility

Fortis has a beta of 0.5, meaning that its stock price is 50% less volatile than the S&P 500. Comparatively, Duke Energy has a beta of 0.49, meaning that its stock price is 51% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of current ratings and target prices for Fortis and Duke Energy, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Fortis	0	6	5	1	2.58
Duke Energy	1	6	11	1	2.63

Fortis currently has a consensus target price of $72.00, indicating a potential upside of 41.32%. Duke Energy has a consensus target price of $138.44, indicating a potential upside of 17.34%. Given Fortis’ higher possible upside, equities research analysts plainly believe Fortis is more favorable than Duke Energy.

Summary

Duke Energy beats Fortis on 13 of the 17 factors compared between the two stocks.

About Fortis

Fortis Inc. operates as an electric and gas utility company in Canada, the United States, and the Caribbean countries. It generates, transmits, and distributes electricity to approximately 447,000 retail customers in southeastern Arizona; and 103,000 retail customers in Arizona's Mohave and Santa Cruz counties with an aggregate capacity of 3,408 megawatts (MW), including 68 MW of solar capacity and 250 MV of wind capacity. The company also sells wholesale electricity to other entities in the western United States; owns gas-fired and hydroelectric generating capacity totaling 65 MW; and distributes natural gas to approximately 1,087,000 residential, commercial, and industrial customers in British Columbia, Canada. In addition, it owns and operates the electricity distribution system that serves approximately 592,000 customers in southern and central Alberta; owns four hydroelectric generating facilities with a combined capacity of 225 MW; and provides operation, maintenance, and management services to five hydroelectric generating facilities. Further, the company distributes electricity in the island portion of Newfoundland and Labrador with an installed generating capacity of 145 MW; and on Prince Edward Island with a generating capacity of 90 MW. Additionally, it provides integrated electric utility service to approximately 69,000 customers in Ontario; approximately 275,000 customers in Newfoundland and Labrador; approximately 34,000 customers on Grand Cayman, Cayman Islands; and approximately 17,000 customers on certain islands in Turks and Caicos. It also holds long-term contracted generation assets in Belize consisting of 3 hydroelectric generating facilities with a combined capacity of 51 MW; and the Aitken Creek natural gas storage facility. It also owns and operates approximately 90,500 circuit Kilometers (km) of distribution lines; and approximately 51,600 km of natural gas pipelines. Fortis Inc. was founded in 1885 and is headquartered in St. John's, Canada.

About Duke Energy

Duke Energy Corporation, together with its subsidiaries, operates as an energy company in the United States. It operates through two segments: Electric Utilities and Infrastructure (EU&I), and Gas Utilities and Infrastructure (GU&I). The EU&I segment generates, transmits, distributes, and sells electricity in the Carolinas, Florida, and the Midwest. It generates electricity through coal, hydroelectric, natural gas, oil, solar and wind sources, renewables, and nuclear fuel. This segment also engages in the wholesale of electricity to municipalities, electric cooperative utilities, and load-serving entities. The GU&I segment distributes natural gas to residential, commercial, industrial, and power generation natural gas customers; and invests in pipeline transmission projects, renewable natural gas projects, and natural gas storage facilities. The company was formerly known as Duke Energy Holding Corp. and changed its name to Duke Energy Corporation in April 2006. Duke Energy Corporation was founded in 1904 and is headquartered in Charlotte, North Carolina.