Financial Analysis: Fortis (NYSE:FTS) & Consolidated Edison (NYSE:ED)

Consolidated Edison (NYSE:ED) and Fortis (NYSE:FTS) are both large-cap utilities companies, but which is the better business? We will contrast the two businesses based on the strength of their institutional ownership, analyst recommendations, dividends, earnings, profitability, risk and valuation.

Analyst Recommendations

This is a summary of recent ratings for Consolidated Edison and Fortis, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Consolidated Edison	5	7	3	0	1.87
Fortis	0	5	5	0	2.50

Consolidated Edison currently has a consensus price target of $108.80, indicating a potential downside of 5.27%. Fortis has a consensus price target of $72.00, indicating a potential upside of 23.79%. Given Fortis’ stronger consensus rating and higher probable upside, analysts plainly believe Fortis is more favorable than Consolidated Edison.

Dividends

Consolidated Edison pays an annual dividend of $3.55 per share and has a dividend yield of 3.1%. Fortis pays an annual dividend of $1.88 per share and has a dividend yield of 3.2%. Consolidated Edison pays out 62.8% of its earnings in the form of a dividend. Fortis pays out 77.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Consolidated Edison has increased its dividend for 52 consecutive years and Fortis has increased its dividend for 5 consecutive years.

Insider & Institutional Ownership

66.3% of Consolidated Edison shares are owned by institutional investors. Comparatively, 57.8% of Fortis shares are owned by institutional investors. 0.2% of Consolidated Edison shares are owned by 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.

Earnings and Valuation

This table compares Consolidated Edison and Fortis”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Consolidated Edison	$16.92 billion	2.45	$2.02 billion	$5.65	20.33
Fortis	$8.71 billion	3.39	$1.29 billion	$2.44	23.84

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

Risk & Volatility

Consolidated Edison has a beta of 0.38, suggesting that its stock price is 62% less volatile than the S&P 500. Comparatively, Fortis has a beta of 0.49, suggesting that its stock price is 51% less volatile than the S&P 500.

Profitability

This table compares Consolidated Edison and Fortis’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Consolidated Edison	11.95%	8.50%	2.82%
Fortis	14.24%	7.24%	2.38%

Summary

Consolidated Edison beats Fortis on 9 of the 17 factors compared between the two stocks.

About Consolidated Edison

Consolidated Edison, Inc., through its subsidiaries, engages in the regulated electric, gas, and steam delivery businesses in the United States. It offers electric services to approximately 3.7 million customers in New York City and Westchester County; gas to approximately 1.1 million customers in Manhattan, the Bronx, parts of Queens, and Westchester County; and steam to approximately 1,530 customers in parts of Manhattan. The company also supplies electricity to approximately 0.3 million customers in southeastern New York and northern New Jersey; and gas to approximately 0.2 million customers in southeastern New York. In addition, it operates 545 circuit miles of transmission lines; 15 transmission substations; 63 distribution substations; 90,051 in-service line transformers; 3,788 pole miles of overhead distribution lines; and 2,314 miles of underground distribution lines, as well as 4,363 miles of mains and 380,870 service lines for natural gas distribution. Further, the company invests in electric and gas transmission projects. It primarily sells electricity to industrial, commercial, residential, and government customers. Consolidated Edison, Inc. was founded in 1823 and is based in New York, New York.

About Fortis

Fortis Inc. operates as an electric and gas utility company in Canada, the United States, and the Caribbean countries. It generates, transmits, and distributes electricity to approximately 447,000 retail customers in southeastern Arizona; and 103,000 retail customers in Arizona's Mohave and Santa Cruz counties with an aggregate capacity of 3,408 megawatts (MW), including 68 MW of solar capacity and 250 MV of wind capacity. The company also sells wholesale electricity to other entities in the western United States; owns gas-fired and hydroelectric generating capacity totaling 65 MW; and distributes natural gas to approximately 1,087,000 residential, commercial, and industrial customers in British Columbia, Canada. In addition, it owns and operates the electricity distribution system that serves approximately 592,000 customers in southern and central Alberta; owns four hydroelectric generating facilities with a combined capacity of 225 MW; and provides operation, maintenance, and management services to five hydroelectric generating facilities. Further, the company distributes electricity in the island portion of Newfoundland and Labrador with an installed generating capacity of 145 MW; and on Prince Edward Island with a generating capacity of 90 MW. Additionally, it provides integrated electric utility service to approximately 69,000 customers in Ontario; approximately 275,000 customers in Newfoundland and Labrador; approximately 34,000 customers on Grand Cayman, Cayman Islands; and approximately 17,000 customers on certain islands in Turks and Caicos. It also holds long-term contracted generation assets in Belize consisting of 3 hydroelectric generating facilities with a combined capacity of 51 MW; and the Aitken Creek natural gas storage facility. It also owns and operates approximately 90,500 circuit Kilometers (km) of distribution lines; and approximately 51,600 km of natural gas pipelines. Fortis Inc. was founded in 1885 and is headquartered in St. John's, Canada.