AES (NYSE:AES) versus United Utilities Group (OTCMKTS:UUGRY) Critical Analysis

AES (NYSE:AES) and United Utilities Group (OTCMKTS:UUGRY) are both large-cap utilities companies, but which is the better investment? We will contrast the two companies based on the strength of their earnings, dividends, risk, valuation, profitability, analyst recommendations and institutional ownership.

Analyst Recommendations

This is a summary of current ratings and target prices for AES and United Utilities Group, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
AES	0	8	1	0	2.11
United Utilities Group	0	4	2	1	2.57

AES presently has a consensus target price of $15.63, indicating a potential upside of 6.33%. Given AES’s higher probable upside, research analysts clearly believe AES is more favorable than United Utilities Group.

Insider & Institutional Ownership

93.1% of AES shares are held by institutional investors. 0.8% of AES shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Earnings & Valuation

This table compares AES and United Utilities Group”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
AES	$12.23 billion	0.86	$910.00 million	$1.87	7.86
United Utilities Group	$3.51 billion	3.57	$337.73 million	N/A	N/A

AES has higher revenue and earnings than United Utilities Group.

Dividends

AES pays an annual dividend of $0.70 per share and has a dividend yield of 4.8%. United Utilities Group pays an annual dividend of $0.90 per share and has a dividend yield of 2.5%. AES pays out 37.4% of its earnings in the form of a dividend. AES has raised its dividend for 12 consecutive years. AES is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Risk and Volatility

AES has a beta of 0.97, meaning that its stock price is 3% less volatile than the S&P 500. Comparatively, United Utilities Group has a beta of 0.82, meaning that its stock price is 18% less volatile than the S&P 500.

Profitability

This table compares AES and United Utilities Group’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
AES	10.78%	22.66%	3.84%
United Utilities Group	N/A	N/A	N/A

Summary

AES beats United Utilities Group on 11 of the 16 factors compared between the two stocks.

About AES

The AES Corporation, together with its subsidiaries, operates as a diversified power generation and utility company in the United States and internationally. The company owns and/or operates power plants to generate and sell power to customers, such as utilities, industrial users, and other intermediaries; owns and/or operates utilities to generate or purchase, distribute, transmit, and sell electricity to end-user customers in the residential, commercial, industrial, and governmental sectors; and generates and sells electricity on the wholesale market. It uses various fuels and technologies to generate electricity, such as coal, gas, hydro, wind, solar, and biomass, as well as renewables comprising energy storage and landfill gas. The company owns and/or operates a generation portfolio of approximately 34,596 megawatts and distributes power to 2.6 million customers. The company was formerly known as Applied Energy Services, Inc. and changed its name to The AES Corporation in April 2000. The AES Corporation was incorporated in 1981 and is headquartered in Arlington, Virginia.

About United Utilities Group

United Utilities Group PLC provides water and wastewater services in the United Kingdom. It is involved in the renewable energy generation, corporate trustee, financing, and property management activities; and provision of consulting, and project management services. The company operates 43,000 kilometers of water pipes; and 79,000 kilometers of wastewater pipes. United Utilities Group PLC was incorporated in 2008 and is based in Warrington, the United Kingdom.