Financial Comparison: RWE (OTCMKTS:RWEOY) & PPL (NYSE:PPL)

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

Dividends

RWE pays an annual dividend of $0.99 per share and has a dividend yield of 1.5%. PPL pays an annual dividend of $1.14 per share and has a dividend yield of 3.2%. RWE pays out 26.1% of its earnings in the form of a dividend. PPL pays out 69.5% 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. PPL has increased its dividend for 3 consecutive years. PPL is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Earnings and Valuation

This table compares RWE and PPL”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
RWE	$19.94 billion	2.38	$3.54 billion	$3.79	17.22
PPL	$9.31 billion	2.91	$1.18 billion	$1.64	21.97

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

Volatility and Risk

RWE has a beta of 0.62, meaning that its stock price is 38% less volatile than the S&P 500. Comparatively, PPL has a beta of 0.57, meaning that its stock price is 43% less volatile than the S&P 500.

Analyst Ratings

This is a summary of recent recommendations and price targets for RWE and PPL, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
RWE	0	5	2	0	2.29
PPL	0	3	10	0	2.77

RWE currently has a consensus target price of $53.30, suggesting a potential downside of 18.33%. PPL has a consensus target price of $41.67, suggesting a potential upside of 15.66%. Given PPL’s stronger consensus rating and higher probable upside, analysts plainly believe PPL is more favorable than RWE.

Insider & Institutional Ownership

77.0% of PPL shares are held by institutional investors. 0.3% of PPL shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
RWE	15.16%	4.77%	1.83%
PPL	13.09%	9.41%	3.10%

Summary

PPL beats RWE on 11 of the 17 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 PPL

PPL Corporation, an energy company, focuses on providing electricity and natural gas to approximately 3.6 million customers in the United States. It operates through three segments: Kentucky Regulated, Pennsylvania Regulated, and Rhode Island Regulated. The company delivers electricity to customers in Pennsylvania, Kentucky, Virginia, and Rhode Island; delivers natural gas to customers in Kentucky and Rhode Island; and generates electricity from power plants in Kentucky. PPL Corporation was founded in 1920 and is headquartered in Allentown, Pennsylvania.