Alliant Energy (NYSE: NWE) and NorthWestern (NYSE:NWE) are both utilities companies, but which is the better stock? We will compare the two companies based on the strength of their profitability, valuation, analyst recommendations, earnings, institutional ownership, risk and dividends.

Volatility and Risk

Alliant Energy has a beta of 0.22, suggesting that its share price is 78% less volatile than the S&P 500. Comparatively, NorthWestern has a beta of 0.13, suggesting that its share price is 87% less volatile than the S&P 500.

Dividends

Alliant Energy pays an annual dividend of $1.34 per share and has a dividend yield of 3.1%. NorthWestern pays an annual dividend of $2.20 per share and has a dividend yield of 3.7%. Alliant Energy pays out 69.4% of its earnings in the form of a dividend. NorthWestern pays out 66.7% 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. Alliant Energy has increased its dividend for 12 consecutive years and NorthWestern has increased its dividend for 9 consecutive years. NorthWestern is clearly the better dividend stock, given its higher yield and lower payout ratio.

Profitability

This table compares Alliant Energy and NorthWestern’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Alliant Energy 14.14% 11.35% 3.36%
NorthWestern 14.84% 10.28% 3.41%

Insider and Institutional Ownership

70.9% of Alliant Energy shares are held by institutional investors. Comparatively, 95.3% of NorthWestern shares are held by institutional investors. 0.3% of Alliant Energy shares are held by insiders. Comparatively, 1.4% of NorthWestern shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Analyst Ratings

This is a summary of current ratings and target prices for Alliant Energy and NorthWestern, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Alliant Energy 1 5 0 0 1.83
NorthWestern 1 2 1 0 2.00

Alliant Energy currently has a consensus price target of $44.80, indicating a potential upside of 3.63%. NorthWestern has a consensus price target of $57.50, indicating a potential downside of 2.77%. Given Alliant Energy’s higher probable upside, research analysts plainly believe Alliant Energy is more favorable than NorthWestern.

Valuation & Earnings

This table compares Alliant Energy and NorthWestern’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Alliant Energy $3.38 billion 2.99 $467.50 million $1.93 22.40
NorthWestern $1.31 billion 2.28 $162.70 million $3.30 17.92

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

Summary

NorthWestern beats Alliant Energy on 9 of the 17 factors compared between the two stocks.

Alliant Energy Company Profile

Alliant Energy Corporation operates as a utility holding company that provides regulated electricity and natural gas services in the Midwest region of the United States. It operates through three segments: Electric, Gas, and Other. The company, through its subsidiary, Interstate Power and Light Company (IPL), primarily generates and distributes electricity, and distributes and transports natural gas to retail customers in Iowa; sells electricity to wholesale customers in Minnesota, Illinois, and Iowa; and generates and distributes steam in Cedar Rapids, Iowa. Alliant Energy Corporation, through its subsidiary, Wisconsin Power and Light Company (WPL), generates and distributes electricity, and distributes and transports natural gas to retail customers in Wisconsin; and sells electricity to wholesale customers in Wisconsin. As of December 31, 2017, IPL supplied electricity to 490,000 retail customers and natural gas to 220,000 retail customers; and WPL supplied electricity to 470,000 retail customers and natural gas to 190,000 retail customers. It offers electric utility services to retail customers in the farming, agriculture, industrial manufacturing, chemical, and paper industries. In addition, the company holds investments in various businesses, which provide freight services through a short-line railway between Cedar Rapids and Iowa City, Iowa; a barge terminal and hauling services on the Mississippi River; and other transfer and storage services. Further, it owns a non-regulated 347 megawatt (MW) natural gas-fired electric generating unit near Sheboygan Falls, Wisconsin; and a non-regulated 99 MW Franklin County wind farm located in Franklin County, Iowa. Alliant Energy Corporation was founded in 1917 and is headquartered in Madison, Wisconsin.

NorthWestern Company Profile

NorthWestern Corporation, doing business as NorthWestern Energy, provides electricity and natural gas to residential, commercial, and industrial customers. The company operates through Electric Operations and Natural Gas Operations segments. It generates, transmits, and distributes electricity; and produces, stores, transmits, and distributes natural gas, as well as owns municipal franchises to provide natural gas service in the communities. The company's electric transmission and distribution network consists of approximately 24,660 miles of overhead and underground transmission and distribution lines, as well as 385 transmission and distribution substations in Montana; and transmission and distribution network comprises of approximately 3,560 miles of overhead and underground transmission and distribution lines, as well as 126 substations in South Dakota. Its natural gas transmission system consists of approximately 2,100 miles of pipeline. The company serves approximately 718,300 customers in Montana, South Dakota, and Nebraska, the United States. NorthWestern Corporation was founded in 1923 and is based in Sioux Falls, South Dakota.

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