Edison International (NYSE: EIX) and Entergy (NYSE:ETR) are both large-cap utilities companies, but which is the superior investment? We will contrast the two businesses based on the strength of their analyst recommendations, valuation, profitability, dividends, institutional ownership, risk and earnings.
Volatility & Risk
Edison International has a beta of 0.17, suggesting that its share price is 83% less volatile than the S&P 500. Comparatively, Entergy has a beta of 0.5, suggesting that its share price is 50% less volatile than the S&P 500.
This table compares Edison International and Entergy’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
Institutional and Insider Ownership
80.6% of Edison International shares are held by institutional investors. Comparatively, 82.3% of Entergy shares are held by institutional investors. 0.4% of Edison International shares are held by company insiders. Comparatively, 0.2% of Entergy shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.
Earnings & Valuation
This table compares Edison International and Entergy’s top-line revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Edison International||$12.32 billion||1.61||$689.00 million||$3.14||19.38|
|Entergy||$11.07 billion||1.24||$425.35 million||$2.28||33.35|
Edison International has higher revenue and earnings than Entergy. Edison International is trading at a lower price-to-earnings ratio than Entergy, indicating that it is currently the more affordable of the two stocks.
Edison International pays an annual dividend of $2.42 per share and has a dividend yield of 4.0%. Entergy pays an annual dividend of $3.56 per share and has a dividend yield of 4.7%. Edison International pays out 77.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Entergy pays out 156.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Edison International has raised its dividend for 3 consecutive years and Entergy has raised its dividend for 13 consecutive years. Entergy is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
This is a summary of current recommendations and price targets for Edison International and Entergy, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
Edison International presently has a consensus target price of $77.17, suggesting a potential upside of 26.81%. Entergy has a consensus target price of $82.62, suggesting a potential upside of 8.65%. Given Edison International’s higher probable upside, research analysts clearly believe Edison International is more favorable than Entergy.
Edison International beats Entergy on 9 of the 16 factors compared between the two stocks.
About Edison International
Edison International is the holding company of Southern California Edison Company (SCE). As of December 31, 2016, SCE, a public utility, was primarily engaged in the business of supplying and delivering electricity to an approximately 50,000 square mile area of southern California. The Company is also the parent company of Edison Energy Group, Inc. (Edison Energy Group), a holding company for subsidiaries engaged in pursuing competitive business opportunities across energy services and distributed solar to commercial and industrial customers. SCE’s projects include West of Devers, Mesa Substation, Alberhill System, Riverside Transmission Reliability, Eldorado-Lugo-Mohave Upgrade, Tehachapi and Coolwater-Lugo. As of December 31, 2016, the West of Devers Project consisted of upgrading and reconfiguring approximately 48 miles of existing 220 kilovolt (kV) transmission lines between the Devers, El Casco, Vista and San Bernardino substations.
Entergy Corporation is a holding company. The Company is an integrated energy company engaged in electric power production and retail electric distribution operations. The Company operates through two business segments: Utility and Entergy Wholesale Commodities. The Utility segment includes the generation, transmission, distribution and sale of electric power to retail and wholesale customers in areas of Arkansas, Mississippi, Texas and Louisiana, including the City of New Orleans and operates a natural gas distribution business. The Entergy Wholesale Commodities segment includes the ownership, operation and decommissioning of nuclear power plants located in the northern United States and the sale of the electric power produced by its operating plants to wholesale customers. As of December 31, 2016, the Company owned and operated power plants with over 30,000 megawatts of aggregate electric generating capacity, including approximately 10,000 megawatts of nuclear-fueled capacity.
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