Head to Head Comparison: Westar Energy (WR) versus Eversource Energy (ES)

Westar Energy (NYSE: WR) and Eversource Energy (NYSE:ES) are both mid-cap utilities companies, but which is the superior business? We will contrast the two companies based on the strength of their risk, analyst recommendations, earnings, valuation, institutional ownership, dividends and profitability.

Profitability

This table compares Westar Energy and Eversource Energy’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Westar Energy 13.33% 8.87% 2.97%
Eversource Energy 12.81% 9.15% 3.07%

Dividends

Westar Energy pays an annual dividend of $1.60 per share and has a dividend yield of 3.0%. Eversource Energy pays an annual dividend of $1.90 per share and has a dividend yield of 3.0%. Westar Energy pays out 67.2% of its earnings in the form of a dividend. Eversource Energy pays out 61.5% 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. Westar Energy has increased its dividend for 11 consecutive years. Eversource Energy is clearly the better dividend stock, given its higher yield and lower payout ratio.

Insider & Institutional Ownership

73.6% of Westar Energy shares are held by institutional investors. Comparatively, 71.9% of Eversource Energy shares are held by institutional investors. 0.7% of Westar Energy shares are held by insiders. Comparatively, 0.5% of Eversource Energy shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Volatility & Risk

Westar Energy has a beta of 0.39, suggesting that its share price is 61% less volatile than the S&P 500. Comparatively, Eversource Energy has a beta of 0.29, suggesting that its share price is 71% less volatile than the S&P 500.

Earnings & Valuation

This table compares Westar Energy and Eversource Energy’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Westar Energy $2.55 billion 2.95 $1.06 billion $2.38 22.24
Eversource Energy $7.68 billion 2.58 $2.63 billion $3.09 20.20

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

Analyst Ratings

This is a summary of recent recommendations for Westar Energy and Eversource Energy, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Westar Energy 0 0 5 0 3.00
Eversource Energy 1 6 2 0 2.11

Westar Energy currently has a consensus target price of $55.75, suggesting a potential upside of 5.33%. Eversource Energy has a consensus target price of $64.06, suggesting a potential upside of 2.62%. Given Westar Energy’s stronger consensus rating and higher probable upside, equities analysts clearly believe Westar Energy is more favorable than Eversource Energy.

Summary

Westar Energy beats Eversource Energy on 10 of the 17 factors compared between the two stocks.

About Westar Energy

Westar Energy, Inc. is an electric utility. The Company provides electric generation, transmission and distribution services. The Company provides these services in central and northeastern Kansas, including the cities of Topeka, Lawrence, Manhattan, Salina and Hutchinson. Its subsidiary, Kansas Gas and Electric Company (KGE), provides these services in south-central and southeastern Kansas, including the city of Wichita. Both the Company and KGE conduct business using the name Westar Energy. The Company supplies electric energy at retail to customers in Kansas. The Company also supplies electric energy at wholesale to municipalities and electric cooperatives in Kansas, and has contracts for the sale or purchase of wholesale electricity with other utilities. As of December 31, 2016, it had 6,292 megawatts (MW) of generating capacity in service.

About Eversource Energy

Eversource Energy is a utility holding company engaged in the energy delivery business. The Company operates through three segments: electric distribution, electric transmission and natural gas distribution. The Company’s electric distribution segment consists of the distribution businesses, which are engaged in the distribution of electricity to retail customers in Connecticut, eastern Massachusetts, New Hampshire and western Massachusetts, and the regulated electric generation businesses. Its electric transmission segment owns and maintains transmission facilities that are part of an interstate power transmission grid over which electricity is transmitted throughout New England. Its electric distribution segment consists of the distribution businesses of The Connecticut Light and Power Company (CL&P), NSTAR Electric Company (NSTAR Electric), Public Service Company of New Hampshire (PSNH) and Western Massachusetts Electric Company (WMECO).

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