NiSource (NYSE:NI) and American Electric Power (NASDAQ:AEP) Head-To-Head Analysis

NiSource (NYSE:NI) and American Electric Power (NASDAQ:AEP) are both large-cap utilities companies, but which is the better business? We will compare the two businesses based on the strength of their analyst recommendations, profitability, dividends, earnings, valuation, institutional ownership and risk.

Risk and Volatility

NiSource has a beta of 0.54, suggesting that its share price is 46% less volatile than the S&P 500. Comparatively, American Electric Power has a beta of 0.53, suggesting that its share price is 47% less volatile than the S&P 500.

Dividends

NiSource pays an annual dividend of $1.20 per share and has a dividend yield of 2.6%. American Electric Power pays an annual dividend of $3.80 per share and has a dividend yield of 3.0%. NiSource pays out 59.7% of its earnings in the form of a dividend. American Electric Power pays out 55.8% 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. NiSource has raised its dividend for 14 consecutive years and American Electric Power has raised its dividend for 15 consecutive years. American Electric Power is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Institutional and Insider Ownership

91.6% of NiSource shares are owned by institutional investors. Comparatively, 75.2% of American Electric Power shares are owned by institutional investors. 0.4% of NiSource shares are owned by company insiders. Comparatively, 0.1% of American Electric Power shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Profitability

This table compares NiSource and American Electric Power’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
NiSource	14.15%	8.31%	2.70%
American Electric Power	16.29%	10.21%	2.89%

Analyst Ratings

This is a summary of recent ratings and recommmendations for NiSource and American Electric Power, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
NiSource	0	3	7	1	2.82
American Electric Power	0	9	13	0	2.59

NiSource currently has a consensus price target of $50.33, indicating a potential upside of 10.30%. American Electric Power has a consensus price target of $141.10, indicating a potential upside of 11.71%. Given American Electric Power’s higher possible upside, analysts plainly believe American Electric Power is more favorable than NiSource.

Valuation & Earnings

This table compares NiSource and American Electric Power”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
NiSource	$6.64 billion	3.29	$929.50 million	$2.01	22.70
American Electric Power	$21.88 billion	3.14	$3.58 billion	$6.81	18.55

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

Summary

American Electric Power beats NiSource on 11 of the 18 factors compared between the two stocks.

About NiSource

NiSource Inc., an energy holding company, operates as a regulated natural gas and electric utility company in the United States. It operates in two segments, Gas Distribution Operations and Electric Operations. The company distributes natural gas to approximately 3.3 million customers through approximately 55,000 miles of distribution main pipeline and the associated individual customer service lines; and 1,000 miles of transmission main pipeline in northern Indiana, Ohio, Pennsylvania, Virginia, Kentucky, and Maryland. It also generates, transmits, and distributes electricity to approximately 0.5 million customers in various counties in the northern part of Indiana, as well as engages in wholesale electric and transmission transactions. It owns and operates coal-fired electric generating stations in Wheatfield and Michigan City; combined cycle gas turbine in West Terre Haute; natural gas generating units in Wheatfield; hydro generating plants in Carroll County and White County; wind generating units in White County, Indiana; and solar generating units in Jasper County and White County. The company was formerly known as NIPSCO Industries, Inc. and changed its name to NiSource Inc. in April 1999. NiSource Inc. was founded in 1847 and is headquartered in Merrillville, Indiana.

About American Electric Power

American Electric Power Company, Inc., an electric public utility holding company, engages in the generation, transmission, and distribution of electricity for sale to retail and wholesale customers in the United States. It operates through Vertically Integrated Utilities, Transmission and Distribution Utilities, AEP Transmission Holdco, and Generation & Marketing segments. The company generates electricity using coal and lignite, natural gas, renewable, nuclear, hydro, solar, wind, and other energy sources. It also supplies and markets electric power at wholesale to other electric utility companies, rural electric cooperatives, municipalities, and other market participants. American Electric Power Company, Inc. was incorporated in 1906 and is headquartered in Columbus, Ohio.