NorthWestern Corporation (NYSE: NWE) and Great Plains Energy (NYSE:GXP) are both mid-cap utilities companies, but which is the superior investment? We will contrast the two businesses based on the strength of their institutional ownership, risk, dividends, analyst recommendations, profitability, earnings and valuation.

Earnings & Valuation

This table compares NorthWestern Corporation and Great Plains Energy’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
NorthWestern Corporation $1.28 billion 2.28 $411.62 million $3.48 17.29
Great Plains Energy $2.69 billion 2.48 $1.11 billion $1.04 29.70

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

Risk and Volatility

NorthWestern Corporation has a beta of 0.36, meaning that its share price is 64% less volatile than the S&P 500. Comparatively, Great Plains Energy has a beta of 0.44, meaning that its share price is 56% less volatile than the S&P 500.

Dividends

NorthWestern Corporation pays an annual dividend of $2.10 per share and has a dividend yield of 3.5%. Great Plains Energy pays an annual dividend of $1.10 per share and has a dividend yield of 3.6%. NorthWestern Corporation pays out 60.3% of its earnings in the form of a dividend. 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. NorthWestern Corporation has increased its dividend for 6 consecutive years and Great Plains Energy has increased its dividend for 8 consecutive years. Great Plains Energy is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Recommendations

This is a summary of recent ratings and recommmendations for NorthWestern Corporation and Great Plains Energy, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
NorthWestern Corporation 2 1 0 0 1.33
Great Plains Energy 0 2 6 0 2.75

NorthWestern Corporation currently has a consensus target price of $57.33, suggesting a potential downside of 4.73%. Great Plains Energy has a consensus target price of $31.71, suggesting a potential upside of 2.67%. Given Great Plains Energy’s stronger consensus rating and higher possible upside, analysts plainly believe Great Plains Energy is more favorable than NorthWestern Corporation.

Insider and Institutional Ownership

94.3% of NorthWestern Corporation shares are held by institutional investors. Comparatively, 87.7% of Great Plains Energy shares are held by institutional investors. 1.3% of NorthWestern Corporation shares are held by company insiders. Comparatively, 0.4% of Great Plains Energy shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Profitability

This table compares NorthWestern Corporation and Great Plains Energy’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
NorthWestern Corporation 13.17% 9.31% 2.86%
Great Plains Energy 8.00% 5.62% 1.82%

Summary

Great Plains Energy beats NorthWestern Corporation on 9 of the 17 factors compared between the two stocks.

About NorthWestern Corporation

NorthWestern Corporation, doing business as North-Western Energy, provides electricity and natural gas. The Company’s segments are Electric operations, Natural gas operations and All other. As of December 31, 2016, the Company provided electricity and natural gas to approximately 709,600 customers in Montana, South Dakota and Nebraska. It generates and distributes electricity in South Dakota; distributes natural gas in South Dakota and Nebraska, and generates and distributes electricity and distributes natural gas in Montana. Its regulated electric utility business in Montana includes generation, transmission and distribution. As of December 31, 2016, it provided retail electricity in 110 communities in South Dakota. Its regulated natural gas utility business in Montana includes production, storage, transmission and distribution. As of December 31, 2016, it provided natural gas to approximately 88,500 customers in 60 South Dakota communities and four Nebraska communities.

About Great Plains Energy

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.

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