Critical Survey: Pacific Gas & Electric (NYSE:PCG) & DTE Energy (NYSE:DTE)

Pacific Gas & Electric (NYSE:PCG) and DTE Energy (NYSE:DTE) 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, earnings, risk, dividends, analyst recommendations, institutional ownership and valuation.

Analyst Recommendations

This is a summary of recent ratings and recommmendations for Pacific Gas & Electric and DTE Energy, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Pacific Gas & Electric	1	6	7	0	2.43
DTE Energy	0	4	9	0	2.69

Pacific Gas & Electric presently has a consensus target price of $20.64, suggesting a potential upside of 38.39%. DTE Energy has a consensus target price of $147.67, suggesting a potential upside of 10.02%. Given Pacific Gas & Electric’s higher possible upside, research analysts plainly believe Pacific Gas & Electric is more favorable than DTE Energy.

Valuation and Earnings

This table compares Pacific Gas & Electric and DTE Energy”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Pacific Gas & Electric	$24.42 billion	1.34	$2.51 billion	$1.19	12.53
DTE Energy	$12.46 billion	2.24	$1.40 billion	$6.66	20.15

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

Insider and Institutional Ownership

78.6% of Pacific Gas & Electric shares are owned by institutional investors. Comparatively, 76.1% of DTE Energy shares are owned by institutional investors. 0.2% of Pacific Gas & Electric shares are owned by company insiders. Comparatively, 0.3% of DTE Energy shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Dividends

Pacific Gas & Electric pays an annual dividend of $0.20 per share and has a dividend yield of 1.3%. DTE Energy pays an annual dividend of $4.66 per share and has a dividend yield of 3.5%. Pacific Gas & Electric pays out 16.8% of its earnings in the form of a dividend. DTE Energy pays out 70.0% 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. Pacific Gas & Electric has increased its dividend for 1 consecutive years and DTE Energy has increased its dividend for 16 consecutive years. DTE Energy is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Volatility and Risk

Pacific Gas & Electric has a beta of 0.38, suggesting that its stock price is 62% less volatile than the S&P 500. Comparatively, DTE Energy has a beta of 0.49, suggesting that its stock price is 51% less volatile than the S&P 500.

Profitability

This table compares Pacific Gas & Electric and DTE Energy’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Pacific Gas & Electric	10.93%	11.10%	2.42%
DTE Energy	9.34%	12.63%	2.99%

Summary

DTE Energy beats Pacific Gas & Electric on 11 of the 17 factors compared between the two stocks.

About Pacific Gas & Electric

PG&E Corp. operates as a holding company, which engages in generation, transmission, and distribution of electricity and natural gas to customers. It specializes in energy, utility, power, gas, electricity, solar and sustainability. The company was founded in 1995 and is headquartered in Oakland, CA.

About DTE Energy

DTE Energy Company engages in the utility operations. The company's Electric segment generates, purchases, distributes, and sells electricity to various residential, commercial, and industrial customers in southeastern Michigan. It generates electricity through coal-fired plants, hydroelectric pumped storage, and nuclear plants, as well as wind and solar assets. This segment owns and operates distribution substations and line transformers. The company's Gas segment purchases, stores, transports, distributes, and sells natural gas to various residential, commercial, and industrial customers throughout Michigan; and sells storage and transportation capacity. Its DTE Vantage segment offers metallurgical and petroleum coke to steel and other industries; and power generation, steam production, chilled water production, and wastewater treatment services, as well as air supplies compressed air to industrial customers. Its Energy Trading segment engages in power, natural gas, and environmental marketing and trading; structured transactions; and the optimization of contracted natural gas pipeline transportation and storage positions. The company was founded in 1849 and is based in Detroit, Michigan.