Financial Comparison: Avista (NYSE:AVA) and FirstEnergy (NYSE:FE)

Avista (NYSE:AVA) and FirstEnergy (NYSE:FE) are both utilities companies, but which is the better business? We will compare the two companies based on the strength of their institutional ownership, valuation, risk, analyst recommendations, profitability, dividends and earnings.

Analyst Ratings

This is a summary of current recommendations and price targets for Avista and FirstEnergy, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Avista	0	6	1	0	2.14
FirstEnergy	0	6	7	0	2.54

Avista currently has a consensus target price of $39.75, suggesting a potential downside of 0.07%. FirstEnergy has a consensus target price of $52.08, suggesting a potential upside of 12.10%. Given FirstEnergy’s stronger consensus rating and higher possible upside, analysts plainly believe FirstEnergy is more favorable than Avista.

Dividends

Avista pays an annual dividend of $1.97 per share and has a dividend yield of 5.0%. FirstEnergy pays an annual dividend of $1.86 per share and has a dividend yield of 4.0%. Avista pays out 78.5% 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 pays out 101.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Avista has raised its dividend for 23 consecutive years and FirstEnergy has raised its dividend for 3 consecutive years. Avista is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Valuation & Earnings

This table compares Avista and FirstEnergy”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Avista	$1.92 billion	1.71	$193.00 million	$2.51	15.85
FirstEnergy	$15.09 billion	1.78	$1.02 billion	$1.84	25.25

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

Volatility and Risk

Avista has a beta of 0.24, indicating that its stock price is 76% less volatile than the S&P 500. Comparatively, FirstEnergy has a beta of 0.47, indicating that its stock price is 53% less volatile than the S&P 500.

Profitability

This table compares Avista and FirstEnergy’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Avista	10.75%	7.65%	2.50%
FirstEnergy	6.86%	10.66%	2.70%

Insider & Institutional Ownership

85.2% of Avista shares are held by institutional investors. Comparatively, 89.4% of FirstEnergy shares are held by institutional investors. 0.8% of Avista shares are held by company insiders. Comparatively, 0.1% of FirstEnergy shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Summary

FirstEnergy beats Avista on 11 of the 17 factors compared between the two stocks.

About Avista

Avista Corporation, together with its subsidiaries, operates as an electric and natural gas utility company. It operates in two segments, Avista Utilities and AEL&P. The Avista Utilities segment provides electric distribution and transmission, and natural gas distribution services in parts of eastern Washington and northern Idaho; and natural gas distribution services in parts of northeastern and southwestern Oregon, as well as generates electricity in Washington, Idaho, Oregon, and Montana. This segment also engages in the supply of electricity to customers in Montana; and wholesale purchase and sale of electricity and natural gas. The AEL&P segment offers electric services in Juneau, Alaska. The company generates electricity through hydroelectric, thermal, wind, and solar generation facilities. As of December 31, 2023, it supplied retail electric services to approximately 416,000 customers; and retail natural gas services to approximately 381,000 customers. The company also operates five hydroelectric generation facilities with capacity of 102.7 MW; and four diesel generating facilities with a capacity of 107.5 MW. It also engages in venture fund investments, real estate investments, and other investments. Avista Corporation was incorporated in 1889 and is headquartered in Spokane, Washington.

About FirstEnergy

FirstEnergy Corp., through its subsidiaries, generates, transmits, and distributes electricity in the United States. It operates through Regulated Distribution and Regulated Transmission segments. The company owns and operates coal-fired, nuclear, hydroelectric, wind, and solar power generating facilities. It operates 24,080 circuit miles of overhead and underground transmission lines; and electric distribution systems, including 274,518 miles of overhead pole line and underground conduit carrying primary, secondary, and street lighting circuits. The company serves approximately 6 million customers in Ohio, Pennsylvania, West Virginia, Maryland, New Jersey, and New York. FirstEnergy Corp. was incorporated in 1996 and is headquartered in Akron, Ohio.