Great Plains Energy (NYSE: GXP) and Public Service Enterprise Group (NYSE:PEG) are both mid-cap utilities companies, but which is the superior business? We will compare the two companies based on the strength of their earnings, institutional ownership, profitabiliy, valuation, analyst recommendations, risk and dividends.

Insider & Institutional Ownership

87.7% of Great Plains Energy shares are held by institutional investors. Comparatively, 65.8% of Public Service Enterprise Group shares are held by institutional investors. 0.4% of Great Plains Energy shares are held by insiders. Comparatively, 0.6% of Public Service Enterprise Group shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Analyst Recommendations

This is a breakdown of recent ratings for Great Plains Energy and Public Service Enterprise Group, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Great Plains Energy 0 2 6 0 2.75
Public Service Enterprise Group 0 7 5 0 2.42

Great Plains Energy currently has a consensus target price of $31.71, suggesting a potential upside of 1.71%. Public Service Enterprise Group has a consensus target price of $47.30, suggesting a potential upside of 3.71%. Given Public Service Enterprise Group’s higher probable upside, analysts clearly believe Public Service Enterprise Group is more favorable than Great Plains Energy.

Profitability

This table compares Great Plains Energy and Public Service Enterprise Group’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Great Plains Energy 8.00% 5.74% 1.94%
Public Service Enterprise Group 4.88% 11.46% 3.77%

Valuation & Earnings

This table compares Great Plains Energy and Public Service Enterprise Group’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Great Plains Energy $2.67 billion 2.52 $1.12 billion $1.04 29.98
Public Service Enterprise Group $9.27 billion 2.49 $3.60 billion $0.89 51.25

Public Service Enterprise Group has higher revenue and earnings than Great Plains Energy. Great Plains Energy is trading at a lower price-to-earnings ratio than Public Service Enterprise Group, indicating that it is currently the more affordable of the two stocks.

Dividends

Great Plains Energy pays an annual dividend of $1.10 per share and has a dividend yield of 3.5%. Public Service Enterprise Group pays an annual dividend of $1.72 per share and has a dividend yield of 3.8%. Great Plains Energy pays out 105.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Public Service Enterprise Group pays out 193.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Great Plains Energy has raised its dividend for 5 consecutive years and Public Service Enterprise Group has raised its dividend for 6 consecutive years. Public Service Enterprise Group is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Volatility and Risk

Great Plains Energy has a beta of 0.44, indicating that its share price is 56% less volatile than the S&P 500. Comparatively, Public Service Enterprise Group has a beta of 0.38, indicating that its share price is 62% less volatile than the S&P 500.

Summary

Great Plains Energy beats Public Service Enterprise Group on 9 of the 17 factors compared between the two stocks.

Great Plains Energy Company Profile

Great Plains Energy Incorporated (Great Plains Energy) is a utility holding company. The Company operates through electric utility segment. The Company’s subsidiaries with operations include Kansas City Power & Light Company (KCP&L) and KCP&L Greater Missouri Operations Company (GMO). KCP&L is an integrated, regulated electric utility that provides electricity to customers primarily in the states of Missouri and Kansas. Kansas City Power & Light Receivables Company (KCP&L Receivables Company) is the KCP&L’s subsidiary. GMO is an integrated, regulated electric utility that provides electricity to customers in the state of Missouri. GMO also provides regulated steam service to certain customers in the St. Joseph, Missouri area. GMO’s subsidiaries include GMO Receivables Company and MPS Merchant Services, Inc. (MPS Merchant). As of December 31, 2016, electric utility had approximately 6,500 megawatts (MWs) of owned generating capacity.

Public Service Enterprise Group Company Profile

Public Service Enterprise Group Incorporated (PSEG) is a holding company. The Company is an energy company with operations located primarily in the Northeastern and Mid-Atlantic United States. The Company’s segments include Public Service Electric and Gas Company (PSE&G), PSEG Power LLC (Power) and Other. PSEG is engaged in the transmission of electricity and distribution of electricity and natural gas in certain areas of New Jersey. PSE&G is also the provider of last resort for gas and electric commodity service for end users in its service territory. Power is a multi-regional energy supply company that integrates the operations of its merchant nuclear and fossil generating assets with its power marketing businesses through energy sales in energy markets and fuel supply functions primarily in the Northeast and Mid-Atlantic United States through its principal subsidiaries. In addition, Power owns and operates solar generation in various states.

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