Contrasting Public Service (PEG) and Exelon (EXC)

Public Service (NYSE: PEG) and Exelon (NYSE:EXC) are both large-cap utilities companies, but which is the better business? We will compare the two companies based on the strength of their analyst recommendations, risk, earnings, profitability, dividends, valuation and institutional ownership.

Profitability

This table compares Public Service and Exelon’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Public Service 17.33% 11.25% 3.63%
Exelon 11.53% 8.35% 2.14%

Volatility and Risk

Public Service has a beta of 0.39, indicating that its share price is 61% less volatile than the S&P 500. Comparatively, Exelon has a beta of 0.16, indicating that its share price is 84% less volatile than the S&P 500.

Institutional and Insider Ownership

68.4% of Public Service shares are owned by institutional investors. Comparatively, 78.1% of Exelon shares are owned by institutional investors. 0.6% of Public Service shares are owned by company insiders. Comparatively, 0.7% of Exelon shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Dividends

Public Service pays an annual dividend of $1.80 per share and has a dividend yield of 3.6%. Exelon pays an annual dividend of $1.38 per share and has a dividend yield of 3.6%. Public Service pays out 61.4% of its earnings in the form of a dividend. Exelon pays out 53.1% 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. Public Service has increased its dividend for 6 consecutive years and Exelon has increased its dividend for 2 consecutive years. Public Service is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Ratings

This is a breakdown of recent ratings and price targets for Public Service and Exelon, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Public Service 0 6 10 0 2.63
Exelon 0 4 11 0 2.73

Public Service presently has a consensus price target of $51.58, suggesting a potential upside of 4.17%. Exelon has a consensus price target of $42.00, suggesting a potential upside of 8.81%. Given Exelon’s stronger consensus rating and higher possible upside, analysts clearly believe Exelon is more favorable than Public Service.

Earnings & Valuation

This table compares Public Service and Exelon’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Public Service $9.08 billion 2.75 $1.57 billion $2.93 16.90
Exelon $33.53 billion 1.11 $3.77 billion $2.60 14.85

Exelon has higher revenue and earnings than Public Service. Exelon is trading at a lower price-to-earnings ratio than Public Service, indicating that it is currently the more affordable of the two stocks.

Summary

Public Service beats Exelon on 9 of the 17 factors compared between the two stocks.

About Public Service

Public Service Enterprise Group Incorporated, through its subsidiaries, operates as an energy company primarily in the Northeastern and Mid- Atlantic United States. It operates through two segments, PSE&G and Power. The PSE&G segment transmits electricity; and distributes electricity and gas to residential, commercial, and industrial customers, as well as invests in solar generation projects, and energy efficiency and related programs; and offers appliance services and repairs to customers. As of December 31, 2017, it had electric transmission and distribution system of 24,000 circuit miles and 853,000 poles; and 18,000 miles of gas mains, 12 gas distribution headquarters, 2 sub-headquarters, and 1 meter shop. This segment also owns and operates 50 switching stations with an aggregate installed capacity of 36,023 megavolt-amperes (MVA), as well as 244 substations with an aggregate installed capacity of 8,250 MVA; and 4 electric distribution headquarters and 5 sub-headquarters, as well as 58 natural gas metering and regulating stations. The Power segment operates nuclear, coal, gas, oil-fired, solar, and renewable generation facilities. As of December 31, 2017, it had an installed fossil and nuclear generating capacity of approximately 10,562 megawatts. Public Service Enterprise Group Incorporated was founded in 1985 and is headquartered in Newark, New Jersey.

About Exelon

Exelon Corporation, a utility services holding company, engages in energy generation and delivery businesses in the United States and Canada. The company owns electric generating facilities, such as nuclear, fossil, wind, hydroelectric, and solar generating facilities. It also sells electricity to wholesale and retail customers; and sells natural gas, renewable energy, and other energy-related products and services. In addition, it is involved in the purchase and regulated retail sale of electricity; and the transmission and distribution of electricity to retail customers in Northern Illinois, Southeastern Pennsylvania, Central Maryland, Delaware, and Southern New Jersey. Further, the company engages in the purchase and regulated retail sale of natural gas, and the distribution of natural gas to retail customers in Pennsylvania counties surrounding the City of Philadelphia, Central Maryland, and Delaware. Additionally, it offers support services, including corporate strategy and development, legal, human resources, information technology, finance, real estate, security, corporate communications, supply at cost, engineering, distribution and transmission planning, asset management, system operations, and power procurement services. The company serves distribution utilities, municipalities, cooperatives, and financial institutions, as well as commercial, industrial, governmental, and residential customers. Exelon Corporation was incorporated in 1999 and is headquartered in Chicago, Illinois.

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