Comparing Eversource Energy (ES) & American Electric Power (AEP)
Eversource Energy (NYSE: ES) and American Electric Power (NYSE:AEP) are both large-cap utilities companies, but which is the better stock? We will contrast the two businesses based on the strength of their profitability, analyst recommendations, institutional ownership, earnings, risk, dividends and valuation.
Eversource Energy pays an annual dividend of $1.90 per share and has a dividend yield of 3.0%. American Electric Power pays an annual dividend of $2.36 per share and has a dividend yield of 3.3%. Eversource Energy pays out 61.5% of its earnings in the form of a dividend. American Electric Power pays out 203.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. American Electric Power has increased its dividend for 4 consecutive years. American Electric Power is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Volatility & Risk
Eversource Energy has a beta of 0.28, suggesting that its share price is 72% less volatile than the S&P 500. Comparatively, American Electric Power has a beta of 0.3, suggesting that its share price is 70% less volatile than the S&P 500.
This is a breakdown of recent ratings and target prices for Eversource Energy and American Electric Power, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|American Electric Power||0||7||7||0||2.50|
Eversource Energy currently has a consensus target price of $62.69, indicating a potential upside of 0.36%. American Electric Power has a consensus target price of $72.18, indicating a potential upside of 0.25%. Given Eversource Energy’s higher probable upside, analysts clearly believe Eversource Energy is more favorable than American Electric Power.
Earnings and Valuation
This table compares Eversource Energy and American Electric Power’s revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Eversource Energy||$7.68 billion||2.58||$2.63 billion||$3.09||20.21|
|American Electric Power||$15.95 billion||2.22||$5.12 billion||$1.16||62.07|
American Electric Power has higher revenue and earnings than Eversource Energy. Eversource Energy is trading at a lower price-to-earnings ratio than American Electric Power, indicating that it is currently the more affordable of the two stocks.
This table compares Eversource Energy and American Electric Power’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|American Electric Power||3.60%||10.32%||2.91%|
Insider and Institutional Ownership
71.3% of Eversource Energy shares are owned by institutional investors. Comparatively, 70.8% of American Electric Power shares are owned by institutional investors. 0.5% of Eversource Energy shares are owned by company insiders. Comparatively, 0.2% of American Electric Power shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.
American Electric Power beats Eversource Energy on 9 of the 17 factors compared between the two stocks.
About Eversource Energy
Eversource Energy is a utility holding company engaged in the energy delivery business. The Company operates through three segments: electric distribution, electric transmission and natural gas distribution. The Company’s electric distribution segment consists of the distribution businesses, which are engaged in the distribution of electricity to retail customers in Connecticut, eastern Massachusetts, New Hampshire and western Massachusetts, and the regulated electric generation businesses. Its electric transmission segment owns and maintains transmission facilities that are part of an interstate power transmission grid over which electricity is transmitted throughout New England. Its electric distribution segment consists of the distribution businesses of The Connecticut Light and Power Company (CL&P), NSTAR Electric Company (NSTAR Electric), Public Service Company of New Hampshire (PSNH) and Western Massachusetts Electric Company (WMECO).
About American Electric Power
American Electric Power Company, Inc. (AEP) is a public utility holding company that owns, directly or indirectly, all of the outstanding common stock of its public utility subsidiaries and varying percentages of other subsidiaries. The service areas of the Company’s public utility subsidiaries cover the states of Arkansas, Indiana, Kentucky, Louisiana, Michigan, Ohio, Oklahoma, Tennessee, Texas, Virginia and West Virginia. The Company’s segments include Vertically Integrated Utilities, Transmission and Distribution Utilities, AEP Transmission Holdco, and Generation & Marketing. AEP’s vertically integrated utility operations are engaged in the generation, transmission and distribution of electricity for sale to retail and wholesale customers. Transmission and Distribution Utilities segment consists of the transmission and distribution of electricity for sale to retail and wholesale customers. AEP Transmission Holdco develops, constructs and operates transmission facilities.
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