Critical Review: RWE (OTCMKTS:RWEOY) versus DTE Energy (NYSE:DTE)

RWE (OTCMKTS:RWEOY) and DTE Energy (NYSE:DTE) are both large-cap utilities companies, but which is the better investment? We will contrast the two companies based on the strength of their dividends, institutional ownership, valuation, profitability, earnings, risk and analyst recommendations.

Profitability

This table compares RWE and DTE Energy’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
RWE	15.16%	4.93%	1.93%
DTE Energy	7.65%	12.37%	2.84%

Valuation & Earnings

This table compares RWE 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
RWE	$19.94 billion	2.42	$3.54 billion	$3.79	17.54
DTE Energy	$15.81 billion	1.94	$1.46 billion	$6.07	24.28

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

Institutional & Insider Ownership

76.1% of DTE Energy shares are held by institutional investors. 0.6% of DTE Energy shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Volatility and Risk

RWE has a beta of 0.62, meaning that its share price is 38% less volatile than the S&P 500. Comparatively, DTE Energy has a beta of 0.39, meaning that its share price is 61% less volatile than the S&P 500.

Analyst Ratings

This is a summary of recent recommendations for RWE and DTE Energy, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
RWE	0	5	1	0	2.17
DTE Energy	0	4	9	1	2.79

RWE presently has a consensus price target of $53.30, indicating a potential downside of 19.84%. DTE Energy has a consensus price target of $156.25, indicating a potential upside of 6.02%. Given DTE Energy’s stronger consensus rating and higher possible upside, analysts plainly believe DTE Energy is more favorable than RWE.

Dividends

RWE pays an annual dividend of $1.00 per share and has a dividend yield of 1.5%. DTE Energy pays an annual dividend of $4.66 per share and has a dividend yield of 3.2%. RWE pays out 26.4% of its earnings in the form of a dividend. DTE Energy pays out 76.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. 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.

Summary

DTE Energy beats RWE on 12 of the 18 factors compared between the two stocks.

About RWE

RWE Aktiengesellschaft generates and supplies electricity from renewable and conventional sources in Germany, the United Kingdom, rest of Europe, North America, and internationally. It operates through five segments: Offshore Wind; Onshore Wind/Solar; Hydro/Biomass/Gas; Supply & Trading; and Coal/Nuclear. The company generates wind, hydro, solar, nuclear, gas, and biomass electricity. It also trades in electricity, gas, and energy commodities; operates gas storage facilities; and engages in battery storage activities. The company serves commercial, industrial, and corporate customers. RWE Aktiengesellschaft was founded in 1898 and is headquartered in Essen, Germany.

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.