Reviewing Southern (NYSE:SO) and E.On (OTCMKTS:EONGY)

Southern (NYSE:SO) and E.On (OTCMKTS:EONGY) are both utilities companies, but which is the superior stock? We will compare the two companies based on the strength of their earnings, risk, institutional ownership, profitability, analyst recommendations, valuation and dividends.

Valuation and Earnings

This table compares Southern and E.On”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Southern	$26.72 billion	3.61	$4.40 billion	$4.04	21.66
E.On	$86.71 billion	N/A	$4.90 billion	$1.22	16.43

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

Insider & Institutional Ownership

64.1% of Southern shares are held by institutional investors. 0.2% of Southern shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Dividends

Southern pays an annual dividend of $2.96 per share and has a dividend yield of 3.4%. E.On pays an annual dividend of $0.46 per share and has a dividend yield of 2.3%. Southern pays out 73.3% of its earnings in the form of a dividend. E.On pays out 37.7% 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. Southern has increased its dividend for 25 consecutive years. Southern is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Recommendations

This is a summary of current recommendations and price targets for Southern and E.On, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Southern	3	12	4	0	2.05
E.On	0	5	2	2	2.67

Southern currently has a consensus price target of $94.91, indicating a potential upside of 8.45%. Given Southern’s higher probable upside, analysts plainly believe Southern is more favorable than E.On.

Profitability

This table compares Southern and E.On’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Southern	15.42%	12.52%	3.14%
E.On	3.61%	11.86%	2.63%

Risk and Volatility

Southern has a beta of 0.46, indicating that its stock price is 54% less volatile than the S&P 500. Comparatively, E.On has a beta of 0.81, indicating that its stock price is 19% less volatile than the S&P 500.

Summary

Southern beats E.On on 11 of the 17 factors compared between the two stocks.

About Southern

The Southern Company, through its subsidiaries, engages in the generation, transmission, and distribution of electricity. The company also develops, constructs, acquires, owns, and manages power generation assets, including renewable energy projects and sells electricity in the wholesale market; and distributes natural gas in Illinois, Georgia, Virginia, and Tennessee, as well as provides gas marketing services, gas distribution operations, and gas pipeline investments operations. In addition, it owns and operates nuclear, coal, hydro, cogeneration, solar, wind, battery storage, and fuel cell facilities. Further, the constructs, operates, and maintains approximately 77,900 miles of natural gas pipelines and 14 storage facilities with total capacity of 157 Bcf to provide natural gas to residential, commercial, and industrial customers. The company serves approximately 8.9 million electric and gas utility customers. Further, it develops distributed energy and resilience solutions; deploys microgrids for commercial, industrial, governmental, and utility customers; and offers digital wireless communications and fiber optics services. The Southern Company was incorporated in 1945 and is headquartered in Atlanta, Georgia.

About E.On

E.ON SE operates as an energy company in Germany, the United Kingdom, Sweden, the Netherlands, rest of Europe, and internationally. It operates through two segments, Energy Networks and Customer Solutions. The Energy Networks segment operates power and gas distribution networks, as well as provides maintenance, repairs, and related services. The Customer Solutions segment supplies power, gas, and heat, as well as with products and services that enhance energy efficiency to residential, small and medium-sized enterprises, large commercial and industrial, sales partners, and public entities. Additionally, it provides SmartSim, a software solution that allows renewable gases to be fed into gas grids; gas quality tracking solutions; GasPro, a mobile gas sample collector; metering solutions; and GasCalc, a software that calculates natural gases, LNG, and biogases properties. The company was founded in 1923 and is headquartered in Essen, Germany.