Analyzing American Electric Power (NASDAQ:AEP) & Unitil (NYSE:UTL)

American Electric Power (NASDAQ:AEP) and Unitil (NYSE:UTL) are both utilities companies, but which is the better business? We will contrast the two companies based on the strength of their dividends, valuation, analyst recommendations, institutional ownership, risk, profitability and earnings.

Volatility and Risk

American Electric Power has a beta of 0.62, indicating that its stock price is 38% less volatile than the S&P 500. Comparatively, Unitil has a beta of 0.49, indicating that its stock price is 51% less volatile than the S&P 500.

Institutional & Insider Ownership

75.2% of American Electric Power shares are held by institutional investors. Comparatively, 76.8% of Unitil shares are held by institutional investors. 0.1% of American Electric Power shares are held by insiders. Comparatively, 2.0% of Unitil shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Dividends

American Electric Power pays an annual dividend of $3.80 per share and has a dividend yield of 3.0%. Unitil pays an annual dividend of $1.90 per share and has a dividend yield of 3.7%. American Electric Power pays out 56.7% of its earnings in the form of a dividend. Unitil pays out 63.3% 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. American Electric Power has increased its dividend for 15 consecutive years and Unitil has increased its dividend for 12 consecutive years.

Analyst Ratings

This is a summary of current ratings for American Electric Power and Unitil, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
American Electric Power	1	9	10	1	2.52
Unitil	0	1	0	0	2.00

American Electric Power currently has a consensus price target of $129.83, indicating a potential upside of 2.01%. Given American Electric Power’s stronger consensus rating and higher possible upside, equities analysts plainly believe American Electric Power is more favorable than Unitil.

Profitability

This table compares American Electric Power and Unitil’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
American Electric Power	16.37%	10.46%	2.92%
Unitil	9.37%	9.38%	2.71%

Valuation and Earnings

This table compares American Electric Power and Unitil”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
American Electric Power	$21.88 billion	3.15	$3.58 billion	$6.70	19.00
Unitil	$536.00 million	1.73	$50.20 million	$3.00	17.21

American Electric Power has higher revenue and earnings than Unitil. Unitil is trading at a lower price-to-earnings ratio than American Electric Power, indicating that it is currently the more affordable of the two stocks.

Summary

American Electric Power beats Unitil on 15 of the 18 factors compared between the two stocks.

About American Electric Power

American Electric Power Company, Inc., an electric public utility holding company, engages in the generation, transmission, and distribution of electricity for sale to retail and wholesale customers in the United States. It operates through Vertically Integrated Utilities, Transmission and Distribution Utilities, AEP Transmission Holdco, and Generation & Marketing segments. The company generates electricity using coal and lignite, natural gas, renewable, nuclear, hydro, solar, wind, and other energy sources. It also supplies and markets electric power at wholesale to other electric utility companies, rural electric cooperatives, municipalities, and other market participants. American Electric Power Company, Inc. was incorporated in 1906 and is headquartered in Columbus, Ohio.

About Unitil

Unitil Corporation, a public utility holding company, engages in the distribution of electricity and natural gas. It operates through two segments, Utility Electric Operations, Utility Gas Operations. The company distributes electricity in the southeastern seacoast and state capital regions of New Hampshire, and the greater Fitchburg area of north central Massachusetts; and distributes natural gas in southeastern New Hampshire and portions of southern and central Maine, including the city of Portland and the Lewiston-Auburn area, as well as electricity and natural gas in the greater Fitchburg area of north central Massachusetts. It also operates 86 miles of interstate underground natural gas transmission pipeline that provides interstate natural gas pipeline access and transportation services primarily in Maine and New Hampshire. In addition, the company provides real estate management services. It serves approximately 108,100 electric customers and 87,500 natural gas customers. Unitil Corporation was incorporated in 1984 and is headquartered in Hampton, New Hampshire.