Analyzing Algonquin Power & Utilities (NYSE:AQN) & Xcel Energy (NASDAQ:XEL)

Xcel Energy (NASDAQ:XEL) and Algonquin Power & Utilities (NYSE:AQN) are both utilities companies, but which is the superior investment? We will compare the two businesses based on the strength of their profitability, risk, earnings, analyst recommendations, valuation, dividends and institutional ownership.

Analyst Ratings

This is a summary of current recommendations and price targets for Xcel Energy and Algonquin Power & Utilities, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Xcel Energy	1	0	13	3	3.06
Algonquin Power & Utilities	0	7	6	0	2.46

Xcel Energy currently has a consensus target price of $90.63, suggesting a potential upside of 14.34%. Algonquin Power & Utilities has a consensus target price of $6.77, suggesting a potential upside of 14.12%. Given Xcel Energy’s stronger consensus rating and higher possible upside, research analysts clearly believe Xcel Energy is more favorable than Algonquin Power & Utilities.

Dividends

Xcel Energy pays an annual dividend of $2.37 per share and has a dividend yield of 3.0%. Algonquin Power & Utilities pays an annual dividend of $0.26 per share and has a dividend yield of 4.4%. Xcel Energy pays out 68.3% of its earnings in the form of a dividend. Algonquin Power & Utilities pays out 118.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Xcel Energy has raised its dividend for 22 consecutive years.

Institutional & Insider Ownership

78.4% of Xcel Energy shares are held by institutional investors. Comparatively, 62.3% of Algonquin Power & Utilities shares are held by institutional investors. 0.2% of Xcel Energy shares are held by company insiders. Comparatively, 0.1% of Algonquin Power & Utilities shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Profitability

This table compares Xcel Energy and Algonquin Power & Utilities’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Xcel Energy	14.14%	10.37%	2.90%
Algonquin Power & Utilities	6.62%	5.21%	1.83%

Earnings & Valuation

This table compares Xcel Energy and Algonquin Power & Utilities”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Xcel Energy	$14.67 billion	3.37	$2.02 billion	$3.47	22.84
Algonquin Power & Utilities	$2.43 billion	1.88	$180.80 million	$0.22	26.98

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

Volatility and Risk

Xcel Energy has a beta of 0.41, indicating that its share price is 59% less volatile than the S&P 500. Comparatively, Algonquin Power & Utilities has a beta of 0.74, indicating that its share price is 26% less volatile than the S&P 500.

Summary

Xcel Energy beats Algonquin Power & Utilities on 15 of the 18 factors compared between the two stocks.

About Xcel Energy

Xcel Energy Inc., through its subsidiaries, engages in the generation, purchasing, transmission, distribution, and sale of electricity. It operates through Regulated Electric Utility, Regulated Natural Gas Utility, and All Other segments. The company generates electricity through wind, nuclear, hydroelectric, biomass, and solar energy sources, as well as coal, natural gas, oil, wood, and refuse-derived fuels. It also purchases, transports, distributes, and sells natural gas to retail customers, as well as transports customer-owned natural gas. In addition, the company develops and leases natural gas pipelines, and storage and compression facilities; and invests in rental housing projects and nonregulated assets, as well as procures equipment for the construction of renewable generation facilities. It serves residential, commercial, and industrial customers in the portions of Colorado, Michigan, Minnesota, New Mexico, North Dakota, South Dakota, Texas, and Wisconsin. The company was incorporated in 1909 and is headquartered in Minneapolis, Minnesota.

About Algonquin Power & Utilities

Algonquin Power & Utilities Corp. is an investment holding company, which engages in energy generation and water distribution facilities. It operates through the Regulated Services Group and Renewable Energy Group segments. The Regulated Services Group segment owns and operates a portfolio of electric, natural gas, water distribution, and wastewater collection utility systems and transmission. The Renewable Energy Group segment focuses on operating a diversified portfolio of renewable and thermal electric generation assets. The company was founded on August 1, 1988 and is headquartered in Oakville, Canada.