Spark Energy (SPKE) vs. Westar Energy (WR) Financial Review

Spark Energy (NASDAQ: SPKE) and Westar Energy (NYSE:WR) are both utilities companies, but which is the better business? We will compare the two companies based on the strength of their earnings, analyst recommendations, profitability, risk, valuation, institutional ownership and dividends.

Profitability

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

Net Margins Return on Equity Return on Assets
Spark Energy 2.37% 38.51% 12.32%
Westar Energy 12.60% 8.40% 2.79%

Dividends

Spark Energy pays an annual dividend of $0.73 per share and has a dividend yield of 6.4%. Westar Energy pays an annual dividend of $1.60 per share and has a dividend yield of 3.1%. Spark Energy pays out -152.1% of its earnings in the form of a dividend. Westar Energy pays out 70.5% 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 12 consecutive years. Spark Energy is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Recommendations

This is a summary of current recommendations and price targets for Spark Energy and Westar Energy, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Spark Energy 0 2 4 0 2.67
Westar Energy 0 0 5 0 3.00

Spark Energy currently has a consensus price target of $21.58, indicating a potential upside of 88.50%. Westar Energy has a consensus price target of $55.25, indicating a potential upside of 6.23%. Given Spark Energy’s higher probable upside, research analysts clearly believe Spark Energy is more favorable than Westar Energy.

Earnings and Valuation

This table compares Spark Energy and Westar Energy’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Spark Energy $798.05 million 0.50 $18.85 million ($0.48) -23.85
Westar Energy $2.57 billion 2.88 $323.92 million $2.27 22.91

Westar Energy has higher revenue and earnings than Spark Energy. Spark 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.

Volatility and Risk

Spark Energy has a beta of -1.86, suggesting that its stock price is 286% less volatile than the S&P 500. Comparatively, Westar Energy has a beta of 0.3, suggesting that its stock price is 70% less volatile than the S&P 500.

Insider and Institutional Ownership

33.3% of Spark Energy shares are held by institutional investors. Comparatively, 74.7% of Westar Energy shares are held by institutional investors. 66.9% of Spark Energy shares are held by company insiders. Comparatively, 0.7% of Westar Energy shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Summary

Westar Energy beats Spark Energy on 10 of the 16 factors compared between the two stocks.

About Spark Energy

Spark Energy, Inc., through its subsidiaries, operates as an independent retail energy services company in the United States. It operates through two segments, Retail Electricity and Retail Natural Gas. The company is involved in the retail distribution of electricity and natural gas to residential, commercial, and industrial customers. As of December 31, 2017, it operated in 94 utility service territories across 19 states and the District of Columbia, and had approximately 1,042,000 residential customer equivalents. The company was founded in 1999 and is headquartered in Houston, Texas. Spark Energy, Inc. is a subsidiary of Retailco, LLC.

About Westar Energy

Westar Energy, Inc., an electric utility company, generates, transmits, and distributes electricity in Kansas. It has 6,602 megawatts of electric generation capacity, which generates electricity through coal, nuclear fuels, natural gas/diesel, and renewable sources. The company also owns approximately 6,400 miles of transmission lines, 24,200 miles of overhead distribution lines, and 5,100 miles of underground distribution lines. It retails electricity to residential, commercial, and industrial customers, as well as for lighting public streets and highways; and engages in the electricity wholesale to electric cooperatives, municipalities, other electric utilities, and regional transmission organizations. The company provides its services in central and northeastern Kansas, including the cities of Topeka, Lawrence, Manhattan, Salina, and Hutchinson, as well as in south-central and southeastern Kansas, such as the city of Wichita. It serves approximately 708,000 customers. Westar Energy, Inc. was founded in 1924 and is headquartered in Topeka, Kansas.

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