Contrasting Atlantica Yield (AY) & PNM Resources (PNM)

Atlantica Yield (NASDAQ: AY) and PNM Resources (NYSE:PNM) are both utilities companies, but which is the superior stock? We will contrast the two businesses based on the strength of their profitability, institutional ownership, risk, valuation, analyst recommendations, dividends and earnings.

Institutional & Insider Ownership

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53.6% of Atlantica Yield shares are owned by institutional investors. Comparatively, 91.8% of PNM Resources shares are owned by institutional investors. 1.3% of PNM Resources shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Risk and Volatility

Atlantica Yield has a beta of 1.05, meaning that its stock price is 5% more volatile than the S&P 500. Comparatively, PNM Resources has a beta of 0.34, meaning that its stock price is 66% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent ratings and price targets for Atlantica Yield and PNM Resources, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Atlantica Yield 0 1 3 0 2.75
PNM Resources 3 7 1 0 1.82

Atlantica Yield currently has a consensus price target of $24.75, suggesting a potential upside of 28.04%. PNM Resources has a consensus price target of $38.79, suggesting a potential upside of 6.42%. Given Atlantica Yield’s stronger consensus rating and higher probable upside, analysts clearly believe Atlantica Yield is more favorable than PNM Resources.

Profitability

This table compares Atlantica Yield and PNM Resources’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Atlantica Yield -11.09% -0.88% -0.16%
PNM Resources 5.55% 8.71% 2.36%

Earnings and Valuation

This table compares Atlantica Yield and PNM Resources’ revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Atlantica Yield $1.01 billion 1.92 -$111.80 million ($1.12) -17.26
PNM Resources $1.45 billion 2.01 $80.40 million $1.00 36.45

PNM Resources has higher revenue and earnings than Atlantica Yield. Atlantica Yield is trading at a lower price-to-earnings ratio than PNM Resources, indicating that it is currently the more affordable of the two stocks.

Dividends

Atlantica Yield pays an annual dividend of $1.24 per share and has a dividend yield of 6.4%. PNM Resources pays an annual dividend of $1.06 per share and has a dividend yield of 2.9%. Atlantica Yield pays out -110.7% of its earnings in the form of a dividend. PNM Resources pays out 106.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. PNM Resources has raised its dividend for 6 consecutive years. Atlantica Yield is clearly the better dividend stock, given its higher yield and lower payout ratio.

Summary

PNM Resources beats Atlantica Yield on 11 of the 17 factors compared between the two stocks.

About Atlantica Yield

Atlantica Yield plc, formerly Abengoa Yield plc, is a total return company. The Company owns, manages, and acquires renewable energy, conventional power, electric transmission lines and water assets, focused on North America (the United States and Mexico), South America (Peru, Chile, Brazil and Uruguay) and Europe, Middle East and Africa (Spain, Algeria and South Africa). Its segments include North America, South America and EMEA. It operates in business sectors, including renewable energy, conventional power, electric transmission lines and water. As of December 31, 2016, it owned or had interests in 21 assets, comprising 1,442 megawatt (MW) of renewable energy generation, 300 MW of conventional power generation, 1,099 miles of electric transmission lines, as well as an exchangeable preferred equity investment in Abengoa Concessoes Brasil Holding S.A., (ACBH). The renewable energy sector includes its activities related to the production electricity from solar power and wind plants.

About PNM Resources

PNM Resources, Inc., through its subsidiaries, engages in the energy and energy-related businesses in the United States. It operates through Public Service Company of New Mexico (PNM) and Texas-New Mexico Power Company (TNMP) segments. The PNM segment is primarily involved in the generation, transmission, and distribution of electricity. It generates electricity using coal, natural gas and oil, nuclear fuel, solar, wind, and geothermal energy sources. As of December 31, 2017, this segment had owned or leased facilities with a total net generation capacity of 2,102 megawatts; and owned 3,200 miles of electric transmission lines, 6,063 miles of distribution overhead lines, 5,828 miles of underground distribution lines, and 254 substations. It also owns and leases office and other equipment, office space, vehicles, and real estate. The TNMP segment provides regulated transmission and distribution services. As of December 31, 2017, this segment owned 978 miles of overhead electric transmission lines, 7,111 miles of overhead distribution lines, 1,241 miles of underground distribution lines, and 116 substations. It also owns and leases vehicles, service facilities, and office locations throughout its service territory. The company serves approximately 773,000 residential, commercial, and industrial customers, as well as end-users of electricity in New Mexico and Texas. PNM Resources, Inc. was founded in 1917 and is headquartered in Albuquerque, New Mexico.

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