National Grid Transco (NYSE:NGG) and FirstEnergy (NYSE:FE) Financial Contrast

FirstEnergy (NYSE:FE) and National Grid Transco (NYSE:NGG) are both large-cap utilities companies, but which is the superior business? We will compare the two companies based on the strength of their valuation, dividends, risk, institutional ownership, earnings, profitability and analyst recommendations.

Profitability

This table compares FirstEnergy and National Grid Transco’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
FirstEnergy	6.86%	10.66%	2.70%
National Grid Transco	N/A	N/A	N/A

Insider and Institutional Ownership

89.4% of FirstEnergy shares are held by institutional investors. Comparatively, 4.7% of National Grid Transco shares are held by institutional investors. 0.1% of FirstEnergy shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Risk & Volatility

FirstEnergy has a beta of 0.47, meaning that its stock price is 53% less volatile than the S&P 500. Comparatively, National Grid Transco has a beta of 0.75, meaning that its stock price is 25% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of current recommendations for FirstEnergy and National Grid Transco, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
FirstEnergy	0	6	7	0	2.54
National Grid Transco	2	7	1	0	1.90

FirstEnergy currently has a consensus price target of $52.23, suggesting a potential upside of 7.93%. National Grid Transco has a consensus price target of $85.50, suggesting a potential upside of 2.94%. Given FirstEnergy’s stronger consensus rating and higher probable upside, analysts plainly believe FirstEnergy is more favorable than National Grid Transco.

Dividends

FirstEnergy pays an annual dividend of $1.86 per share and has a dividend yield of 3.8%. National Grid Transco pays an annual dividend of $4.31 per share and has a dividend yield of 5.2%. FirstEnergy pays out 101.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. FirstEnergy has increased its dividend for 3 consecutive years.

Earnings & Valuation

This table compares FirstEnergy and National Grid Transco”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
FirstEnergy	$15.09 billion	1.86	$1.02 billion	$1.84	26.30
National Grid Transco	$23.71 billion	3.64	$4.34 billion	N/A	N/A

National Grid Transco has higher revenue and earnings than FirstEnergy.

Summary

FirstEnergy beats National Grid Transco on 9 of the 15 factors compared between the two stocks.

About FirstEnergy

FirstEnergy Corp., through its subsidiaries, generates, transmits, and distributes electricity in the United States. It operates through Regulated Distribution and Regulated Transmission segments. The company owns and operates coal-fired, nuclear, hydroelectric, wind, and solar power generating facilities. It operates 24,080 circuit miles of overhead and underground transmission lines; and electric distribution systems, including 274,518 miles of overhead pole line and underground conduit carrying primary, secondary, and street lighting circuits. The company serves approximately 6 million customers in Ohio, Pennsylvania, West Virginia, Maryland, New Jersey, and New York. FirstEnergy Corp. was incorporated in 1996 and is headquartered in Akron, Ohio.

About National Grid Transco

National Grid plc transmits and distributes electricity and gas. It operates through UK Electricity Transmission, UK Electricity Distribution, UK Electricity System Operator, New England, New York, National Grid Ventures, and Other segments. The UK Electricity Transmission segment provides electricity transmission and construction work services in England and Wales. The UK Electricity Distribution segment offers electricity distribution services in Midlands, and South West of England and South Wales. The UK Electricity System Operator segment provides balancing services for supply and demand of electricity on Great Britain’s electricity transmission system; and acts as an agent on behalf of transmission operators. The New England segment offers electricity and gas distribution, and electricity transmission services in New England. The New York segment provides electricity and gas distribution, and electricity transmission services in New York. The National Grid Ventures segment provides transmission services through electricity interconnectors and LNG importation at the Isle of Grain, as well as sale of renewables projects. The Other segment engages in the leasing and sale of commercial property, as well as insurance activities in the United Kingdom. The company was founded in 1990 and is headquartered in London, the United Kingdom.