Analyzing FirstEnergy (NYSE:FE) and Exelon (NASDAQ:EXC)

FirstEnergy (NYSE:FE) and Exelon (NASDAQ:EXC) are both large-cap utilities companies, but which is the better investment? We will compare the two businesses based on the strength of their risk, valuation, analyst recommendations, institutional ownership, earnings, dividends and profitability.

Analyst Ratings

This is a summary of current ratings and recommmendations for FirstEnergy and Exelon, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
FirstEnergy	0	6	6	0	2.50
Exelon	0	14	4	0	2.22

FirstEnergy presently has a consensus price target of $51.27, indicating a potential upside of 13.84%. Exelon has a consensus price target of $49.33, indicating a potential upside of 17.20%. Given Exelon’s higher possible upside, analysts clearly believe Exelon is more favorable than FirstEnergy.

Valuation & Earnings

This table compares FirstEnergy and Exelon”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
FirstEnergy	$15.82 billion	1.65	$1.02 billion	$1.88	23.96
Exelon	$24.26 billion	1.79	$2.77 billion	$2.73	15.42

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

Institutional & Insider Ownership

89.4% of FirstEnergy shares are held by institutional investors. Comparatively, 80.9% of Exelon shares are held by institutional investors. 0.1% of FirstEnergy shares are held by insiders. Comparatively, 0.1% of Exelon shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Dividends

FirstEnergy pays an annual dividend of $1.86 per share and has a dividend yield of 4.1%. Exelon pays an annual dividend of $1.68 per share and has a dividend yield of 4.0%. FirstEnergy pays out 98.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Exelon pays out 61.5% of its earnings in the form of a dividend. FirstEnergy has raised its dividend for 3 consecutive years and Exelon has raised its dividend for 3 consecutive years.

Profitability

This table compares FirstEnergy and Exelon’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
FirstEnergy	6.86%	10.51%	2.62%
Exelon	10.99%	9.81%	2.43%

Risk and Volatility

FirstEnergy has a beta of 0.43, indicating that its share price is 57% less volatile than the S&P 500. Comparatively, Exelon has a beta of 0.3, indicating that its share price is 70% less volatile than the S&P 500.

Summary

FirstEnergy beats Exelon on 9 of the 16 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 Exelon

Exelon Corporation, a utility services holding company, engages in the energy distribution and transmission businesses in the United States and Canada. The company is involved in the purchase and regulated retail sale of electricity and natural gas, transmission and distribution of electricity, and distribution of natural gas to retail customers. It also offers support services, including legal, human resources, information technology, supply management, financial, engineering, customer operations, transmission and distribution planning, asset management, system operations, and power procurement services. It serves distribution utilities, municipalities, and financial institutions, as well as commercial, industrial, governmental, and residential customers. Exelon Corporation was incorporated in 1999 and is headquartered in Chicago, Illinois.