Pinnacle West Capital (NYSE:PNW) versus CPFL Energia (NYSE:CPL) Financial Analysis

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Pinnacle West Capital (NYSE:PNW) and CPFL Energia (NYSE:CPL) are both utilities companies, but which is the better business? We will contrast the two companies based on the strength of their institutional ownership, valuation, profitability, analyst recommendations, risk, dividends and earnings.

Dividends

Pinnacle West Capital pays an annual dividend of $3.13 per share and has a dividend yield of 3.4%. CPFL Energia pays an annual dividend of $0.22 per share and has a dividend yield of 1.2%. Pinnacle West Capital pays out 68.9% of its earnings in the form of a dividend. Pinnacle West Capital has raised its dividend for 7 consecutive years and CPFL Energia has raised its dividend for 5 consecutive years. Pinnacle West Capital is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Ratings

This is a summary of current ratings for Pinnacle West Capital and CPFL Energia, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Pinnacle West Capital 3 6 3 0 2.00
CPFL Energia 0 1 2 0 2.67

Pinnacle West Capital presently has a consensus price target of $95.45, indicating a potential upside of 2.27%. Given Pinnacle West Capital’s higher possible upside, equities research analysts plainly believe Pinnacle West Capital is more favorable than CPFL Energia.

Profitability

This table compares Pinnacle West Capital and CPFL Energia’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Pinnacle West Capital 14.07% 9.19% 2.78%
CPFL Energia 9.01% 17.95% 5.72%

Valuation & Earnings

This table compares Pinnacle West Capital and CPFL Energia’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 $3.69 billion 2.84 $511.05 million $4.54 20.56
CPFL Energia $7.65 billion 1.34 $563.08 million N/A N/A

CPFL Energia has higher revenue and earnings than Pinnacle West Capital.

Risk & Volatility

Pinnacle West Capital has a beta of 0.05, meaning that its share price is 95% less volatile than the S&P 500. Comparatively, CPFL Energia has a beta of 0.43, meaning that its share price is 57% less volatile than the S&P 500.

Institutional and Insider Ownership

85.8% of Pinnacle West Capital shares are held by institutional investors. Comparatively, 0.3% of CPFL Energia shares are held by institutional investors. 0.4% of Pinnacle West Capital shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Summary

Pinnacle West Capital beats CPFL Energia on 9 of the 16 factors compared between the two stocks.

Pinnacle West Capital Company Profile

Pinnacle West Capital Corporation, through its subsidiary, Arizona Public Service Company, provides retail and wholesale electric services primarily in the state of Arizona. It generates, transmits, and distributes electricity using coal, nuclear, gas, oil, and solar generating facilities. The company serves approximately 1.2 million customers. It owns or leases approximately 6,015 megawatts of regulated generation capacity. The company was incorporated in 1985 and is headquartered in Phoenix, Arizona.

CPFL Energia Company Profile

CPFL Energia S.A., through its subsidiaries, generates, transmits, distributes, and commercializes electricity to residential, industrial, and commercial customers in Brazil. The company generates electricity through wind, biomass, solar, and hydroelectric power plants. It also manufactures, commercializes, rents, and maintains electro-mechanical equipment; and offers administrative, call center, collection, IT, telecommunication, energy transmission, and energy efficiency management services, as well as maintenance services for energy generation companies. As of December 31, 2018, the company distributed electricity to approximately 9.6 million customers; and had 323,979 kilometers of distribution lines, which included 464,627 distribution transformers. It also has an installed capacity of 3,272 megawatts. The company was founded in 1998 and is headquartered in Campinas, Brazil. CPFL Energia S.A. is a subsidiary of State Grid Brazil Power ParticipaƧƵes S.A.

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