Ameren Corporation (NYSE: AEE) and Sempra Energy (NYSE:SRE) are both large-cap multiline utilities – nec companies, but which is the superior stock? We will contrast the two companies based on the strength of their valuation, risk, profitability, institutional ownership, analyst recommendations, dividends and earnings.

Institutional & Insider Ownership

71.2% of Ameren Corporation shares are owned by institutional investors. Comparatively, 80.6% of Sempra Energy shares are owned by institutional investors. 0.4% of Ameren Corporation shares are owned by insiders. Comparatively, 0.2% of Sempra Energy shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Earnings & Valuation

This table compares Ameren Corporation and Sempra Energy’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
Ameren Corporation $6.08 billion 2.50 $653.00 million $2.52 24.81
Sempra Energy $10.18 billion 2.99 $1.37 billion $4.51 26.86

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

Analyst Recommendations

This is a breakdown of recent ratings and target prices for Ameren Corporation and Sempra Energy, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Ameren Corporation 1 4 0 0 1.80
Sempra Energy 0 3 5 0 2.63

Ameren Corporation currently has a consensus target price of $57.00, indicating a potential downside of 8.81%. Sempra Energy has a consensus target price of $124.13, indicating a potential upside of 2.45%. Given Sempra Energy’s stronger consensus rating and higher probable upside, analysts plainly believe Sempra Energy is more favorable than Ameren Corporation.

Volatility and Risk

Ameren Corporation has a beta of 0.38, suggesting that its stock price is 62% less volatile than the S&P 500. Comparatively, Sempra Energy has a beta of 0.62, suggesting that its stock price is 38% less volatile than the S&P 500.

Dividends

Ameren Corporation pays an annual dividend of $1.76 per share and has a dividend yield of 2.8%. Sempra Energy pays an annual dividend of $3.29 per share and has a dividend yield of 2.7%. Ameren Corporation pays out 69.8% of its earnings in the form of a dividend. Sempra Energy pays out 72.9% 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. Ameren Corporation has raised its dividend for 6 consecutive years and Sempra Energy has raised its dividend for 3 consecutive years. Ameren Corporation is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

This table compares Ameren Corporation and Sempra Energy’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Ameren Corporation 10.03% 8.61% 2.51%
Sempra Energy 10.22% 8.81% 2.79%

Summary

Sempra Energy beats Ameren Corporation on 12 of the 17 factors compared between the two stocks.

About Ameren Corporation

Ameren Corporation is a utility holding company. The Company’s subsidiaries include Ameren Missouri, Ameren Illinois and Ameren Transmission Company (ATXI). It operates through four segments. The Ameren Missouri segment includes all of the operations of Ameren Missouri. The Ameren Illinois Electric Distribution segment consists of the electric distribution business of Ameren Illinois. The Ameren Illinois Natural Gas segment consists of the natural gas business of Ameren Illinois. The ATXI segment consists of the aggregated electric transmission businesses of Ameren Illinois and ATXI. Ameren Missouri operates a rate-regulated electric generation, transmission, and distribution business and a rate-regulated natural gas distribution business in Missouri. Ameren Illinois operates rate-regulated electric distribution, electric transmission and natural gas distribution businesses in Illinois. ATXI operates a Federal Energy Regulatory Commission rate-regulated electric transmission business.

About Sempra Energy

Sempra Energy is a holding company. The Company’s principal operating units are Sempra Utilities, which includes its San Diego Gas & Electric Company (SDG&E), Southern California Gas Company (SoCalGas) and Sempra South American Utilities segments, and Sempra Infrastructure, which includes its Sempra Mexico, Sempra Renewables and Sempra LNG & Midstream segments. As of December 31, 2016, SDG&E’s service area covered 4,100 square miles. Sempra South American Utilities operates Chilquinta Energia, which serves customers in the region of Valparaiso in central Chile. As of December 31, 2016, SoCalGas had natural gas franchises with the 12 counties and the 223 cities in its service territory. Sempra LNG & Midstream owns land in Simpson County, Mississippi Hub. Sempra LNG & Midstream owns land in Port Arthur, Texas. Sempra Renewables has operations, investments or development projects in the various United States markets.

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