RWE (OTCMKTS:RWEOY) & PPL (NYSE:PPL) Financial Contrast

PPL (NYSE:PPL) and RWE (OTCMKTS:RWEOY) are both large-cap utilities companies, but which is the superior investment? We will contrast the two businesses based on the strength of their institutional ownership, profitability, earnings, risk, valuation, dividends and analyst recommendations.

Analyst Ratings

This is a breakdown of recent ratings and price targets for PPL and RWE, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
PPL	0	3	10	0	2.77
RWE	0	5	2	0	2.29

PPL currently has a consensus target price of $41.67, indicating a potential upside of 15.66%. RWE has a consensus target price of $53.30, indicating a potential downside of 18.33%. Given PPL’s stronger consensus rating and higher probable upside, equities research analysts clearly believe PPL is more favorable than RWE.

Dividends

PPL pays an annual dividend of $1.14 per share and has a dividend yield of 3.2%. RWE pays an annual dividend of $0.99 per share and has a dividend yield of 1.5%. PPL pays out 69.5% of its earnings in the form of a dividend. RWE pays out 26.1% 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. PPL has raised its dividend for 3 consecutive years. PPL is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Insider and Institutional Ownership

77.0% of PPL shares are held by institutional investors. 0.3% of PPL shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Earnings and Valuation

This table compares PPL and RWE”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
PPL	$9.31 billion	2.91	$1.18 billion	$1.64	21.97
RWE	$19.94 billion	2.38	$3.54 billion	$3.79	17.22

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

Volatility and Risk

PPL has a beta of 0.57, meaning that its stock price is 43% less volatile than the S&P 500. Comparatively, RWE has a beta of 0.62, meaning that its stock price is 38% less volatile than the S&P 500.

Profitability

This table compares PPL and RWE’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
PPL	13.09%	9.41%	3.10%
RWE	15.16%	4.77%	1.83%

Summary

PPL beats RWE on 11 of the 17 factors compared between the two stocks.

About PPL

PPL Corporation, an energy company, focuses on providing electricity and natural gas to approximately 3.6 million customers in the United States. It operates through three segments: Kentucky Regulated, Pennsylvania Regulated, and Rhode Island Regulated. The company delivers electricity to customers in Pennsylvania, Kentucky, Virginia, and Rhode Island; delivers natural gas to customers in Kentucky and Rhode Island; and generates electricity from power plants in Kentucky. PPL Corporation was founded in 1920 and is headquartered in Allentown, Pennsylvania.

About RWE

RWE Aktiengesellschaft generates and supplies electricity from renewable and conventional sources in Germany, the United Kingdom, rest of Europe, North America, and internationally. It operates through five segments: Offshore Wind; Onshore Wind/Solar; Hydro/Biomass/Gas; Supply & Trading; and Coal/Nuclear. The company generates wind, hydro, solar, nuclear, gas, and biomass electricity. It also trades in electricity, gas, and energy commodities; operates gas storage facilities; and engages in battery storage activities. The company serves commercial, industrial, and corporate customers. RWE Aktiengesellschaft was founded in 1898 and is headquartered in Essen, Germany.