TECO Energy (NYSE: TE) and Pinnacle West Capital (NYSE:PNW) are both mid-cap electric utilities – nec companies, but which is the better business? We will contrast the two companies based on the strength of their risk, analyst recommendations, valuation, institutional ownership, earnings, profitability and dividends.
This is a summary of current recommendations and price targets for TECO Energy and Pinnacle West Capital, as reported by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Pinnacle West Capital||1||9||0||0||1.90|
This table compares TECO Energy and Pinnacle West Capital’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Pinnacle West Capital||14.67%||10.31%||3.16%|
TECO Energy pays an annual dividend of $0.92 per share and has a dividend yield of 3.3%. Pinnacle West Capital pays an annual dividend of $2.78 per share and has a dividend yield of 3.5%. TECO Energy pays out 86.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Pinnacle West Capital pays out 63.9% of its earnings in the form of a dividend. TECO Energy has raised its dividend for 3 consecutive years and Pinnacle West Capital has raised its dividend for 6 consecutive years. Pinnacle West Capital is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Valuation and Earnings
This table compares TECO Energy and Pinnacle West Capital’s gross revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Pinnacle West Capital||$3.50 billion||2.56||$442.03 million||$4.35||18.43|
Pinnacle West Capital has higher revenue and earnings than TECO Energy. Pinnacle West Capital is trading at a lower price-to-earnings ratio than TECO Energy, indicating that it is currently the more affordable of the two stocks.
Institutional & Insider Ownership
82.1% of Pinnacle West Capital shares are held by institutional investors. 0.7% of Pinnacle West Capital shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.
Pinnacle West Capital beats TECO Energy on 11 of the 12 factors compared between the two stocks.
TECO Energy Company Profile
TECO Energy, Inc. (TECO Energy) is a holding company for regulated utilities and other businesses. TECO Energy holds all of the common stock of Tampa Electric Company (TEC) and through its subsidiary, New Mexico Gas Intermediate, Inc. (NMGI), owns New Mexico Gas Company, Inc. (NMGC). The Company’s segments include Tampa Electric, Peoples Gas System (PGS) and NMGC. Its Tampa Electric division is engaged in the generation, purchase, transmission, distribution and sale of electric energy. The retail territory served comprises an area of approximately 2,000 square miles in West Central Florida. PGS, the gas division of TEC, is engaged in the purchase, distribution and sale of natural gas for residential, commercial, industrial and electric power generation customers in the state of Florida. NMGC is engaged in the purchase, distribution and sale of natural gas for residential, commercial and industrial customers in the state of New Mexico.
Pinnacle West Capital Company Profile
Pinnacle West Capital Corporation is a holding company that operates through its subsidiaries. The Company operates through regulated electricity segment, which consists of traditional regulated retail and wholesale electricity businesses and related activities, and includes electricity generation, transmission and distribution. It owned and leased 6,236 megawatt (MW) of regulated generation capacity and the Company held a mix of both long-term and short-term purchased power agreements for additional capacity, including agreements for the purchase of renewable energy, as of December 31, 2016. Its subsidiaries include Arizona Public Service Company, which is a vertically-integrated electric utility that provides retail or wholesale electric service to the State of Arizona, with the exceptions of about one-half of the Phoenix metropolitan area, the Tucson metropolitan area and Mohave County in northwestern Arizona.
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