Kenon Holdings (NYSE: KEN) and American Electric Power (NYSE:AEP) are both electric utilities – nec 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.

Dividends

American Electric Power pays an annual dividend of $2.36 per share and has a dividend yield of 3.1%. Kenon Holdings does not pay a dividend. American Electric Power pays out 61.6% of its earnings in the form of a dividend. American Electric Power has increased its dividend for 4 consecutive years.

Analyst Recommendations

This is a breakdown of recent ratings and target prices for Kenon Holdings and American Electric Power, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Kenon Holdings 0 0 0 0 N/A
American Electric Power 0 8 5 0 2.38

American Electric Power has a consensus target price of $73.91, indicating a potential downside of 1.70%. Given American Electric Power’s higher probable upside, analysts clearly believe American Electric Power is more favorable than Kenon Holdings.

Valuation and Earnings

This table compares Kenon Holdings and American Electric Power’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
Kenon Holdings $1.87 billion 0.50 -$411.93 million ($1.97) -8.81
American Electric Power $16.40 billion 2.25 $610.90 million $3.83 19.63

American Electric Power has higher revenue and earnings than Kenon Holdings. Kenon Holdings 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.

Profitability

This table compares Kenon Holdings and American Electric Power’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Kenon Holdings -5.10% -8.83% -1.54%
American Electric Power 12.21% 9.67% 2.73%

Insider and Institutional Ownership

0.9% of Kenon Holdings shares are owned by institutional investors. Comparatively, 72.1% of American Electric Power shares are owned by institutional investors. 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.

Summary

American Electric Power beats Kenon Holdings on 13 of the 14 factors compared between the two stocks.

Kenon Holdings Company Profile

Kenon Holdings Ltd. is a holding company that operates primarily growth-oriented businesses. The Company’s segments include I.C. Power Asia Development Ltd (IC Power), Qoros Automotive Co., Ltd. (Qoros) and Other. I.C. Power, through its subsidiary companies, is engaged in the production, operation and sale of electricity in countries in Latin America, the Caribbean region and Israel. Qoros is an automotive company. Its other activities include shipping services and renewable energy businesses. The Company also holds interests in ZIM Integrated Shipping Services, Ltd. (ZIM), which is a provider of container shipping services, and Primus Green Energy, Inc. (Primus), which is a developer and owner of a natural gas-to-liquid technology process. IC Power is an owner, developer and operator of power generation facilities, and operates power distribution business. Qoros offers approximately three vehicle models, which include the Qoros 3 Sedan, the Qoros 3 Hatch and the Qoros 3 City SUV.

American Electric Power Company Profile

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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