Financial Contrast: RWE (OTCMKTS:RWEOY) and CenterPoint Energy (NYSE:CNP)

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

Analyst Recommendations

This is a summary of current recommendations for CenterPoint Energy and RWE, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
CenterPoint Energy	1	6	7	0	2.43
RWE	0	3	2	1	2.67

CenterPoint Energy currently has a consensus price target of $42.55, indicating a potential upside of 1.21%. RWE has a consensus price target of $53.30, indicating a potential downside of 16.91%. Given CenterPoint Energy’s higher possible upside, equities analysts plainly believe CenterPoint Energy is more favorable than RWE.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
CenterPoint Energy	11.24%	10.46%	2.56%
RWE	17.96%	4.96%	1.88%

Valuation & Earnings

This table compares CenterPoint Energy and RWE”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
CenterPoint Energy	$9.36 billion	2.94	$1.05 billion	$1.60	26.27
RWE	$19.94 billion	2.34	$3.54 billion	$4.88	13.15

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

Risk & Volatility

CenterPoint Energy has a beta of 0.58, suggesting that its stock price is 42% less volatile than the S&P 500. Comparatively, RWE has a beta of 0.68, suggesting that its stock price is 32% less volatile than the S&P 500.

Dividends

CenterPoint Energy pays an annual dividend of $0.92 per share and has a dividend yield of 2.2%. RWE pays an annual dividend of $0.88 per share and has a dividend yield of 1.4%. CenterPoint Energy pays out 57.5% of its earnings in the form of a dividend. RWE pays out 18.0% 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. CenterPoint Energy has raised its dividend for 5 consecutive years. CenterPoint Energy is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Insider & Institutional Ownership

91.8% of CenterPoint Energy shares are owned by institutional investors. 0.2% of CenterPoint Energy shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Summary

CenterPoint Energy beats RWE on 10 of the 18 factors compared between the two stocks.

About CenterPoint Energy

CenterPoint Energy, Inc. operates as a public utility holding company in the United States. The company operates through two segments, Electric and Natural Gas. The Electric segment includes electric transmission and distribution services to electric customers and electric generation assets, as well as optimizes assets in the wholesale power market. The Natural Gas segment engages in the intrastate natural gas sales, and natural gas transportation and distribution for residential, commercial, industrial and institutional customers in Indiana, Louisiana, Minnesota, Mississippi, Ohio, and Texas; permanent pipeline connections through interconnects with various interstate and intrastate pipeline companies; and provides maintenance and repair services of home appliances to customers in Minnesota and home repair protection plans to natural gas customers in Indiana, Mississippi, Ohio, and Texas through a third party. It serves approximately 2,534,730 metered customers; owned 348 substations with transformer capacity of 79,719 megavolt amperes; and owned and operated 217 miles of intrastate pipeline in Louisiana and Texas. The company was founded in 1866 and is headquartered in Houston, Texas.

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.