Analyzing Pepco (POM) and Its Competitors

Pepco (NYSE: POM) is one of 82 public companies in the “Electric Utilities” industry, but how does it contrast to its peers? We will compare Pepco to similar companies based on the strength of its valuation, earnings, risk, dividends, institutional ownership, analyst recommendations and profitability.

Analyst Ratings

This is a breakdown of current recommendations and price targets for Pepco and its peers, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Pepco 0 0 0 0 N/A
Pepco Competitors 537 2975 2392 43 2.33

As a group, “Electric Utilities” companies have a potential upside of 8.62%. Given Pepco’s peers higher probable upside, analysts plainly believe Pepco has less favorable growth aspects than its peers.

Earnings & Valuation

This table compares Pepco and its peers gross revenue, earnings per share and valuation.

Gross Revenue Net Income Price/Earnings Ratio
Pepco N/A N/A 21.54
Pepco Competitors $7.66 billion $831.80 million 50.68

Pepco’s peers have higher revenue and earnings than Pepco. Pepco is trading at a lower price-to-earnings ratio than its peers, indicating that it is currently more affordable than other companies in its industry.

Dividends

Pepco pays an annual dividend of $1.08 per share and has a dividend yield of 4.0%. Pepco pays out 86.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. As a group, “Electric Utilities” companies pay a dividend yield of 3.2% and pay out 101.3% of their earnings in the form of a dividend. Pepco is clearly a better dividend stock than its peers, given its higher yield and lower payout ratio.

Profitability

This table compares Pepco and its peers’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Pepco 10.52% 11.08% 2.95%
Pepco Competitors -10.00% 9.28% 2.55%

Institutional & Insider Ownership

65.6% of shares of all “Electric Utilities” companies are held by institutional investors. 2.7% of shares of all “Electric Utilities” companies are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Summary

Pepco beats its peers on 5 of the 9 factors compared.

Pepco Company Profile

Pepco Holdings LLC, formerly Pepco Holdings, Inc., is a holding company. The Company, through its utility subsidiaries, is engaged in the transmission, distribution and default supply of electricity, and the distribution and supply of natural gas. The Company’s segments include Power Delivery, Pepco Energy Services, and Corporate and Other. The Company’s subsidiaries include Potomac Electric Power Company (Pepco), Delmarva Power & Light Company (DPL) and Atlantic City Electric Company (ACE). Pepco is engaged in the transmission, distribution and default supply of electricity. DPL is involved in the transmission, distribution and default supply of electricity, and distribution and supply of natural gas. ACE is engaged in the transmission, distribution and default supply of electricity. The Company’s subsidiaries own and operate a network of wires, substations and other equipment that are classified as transmission facilities, distribution facilities or common facilities.

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