CMS Energy (NYSE:CMS) and Public Service Enterprise Group (NYSE:PEG) are both large-cap utilities companies, but which is the superior business? We will contrast the two businesses based on the strength of their valuation, profitability, institutional ownership, earnings, dividends, risk and analyst recommendations.
Dividends
CMS Energy pays an annual dividend of $1.74 per share and has a dividend yield of 3.2%. Public Service Enterprise Group pays an annual dividend of $1.96 per share and has a dividend yield of 3.5%. CMS Energy pays out 69.9% of its earnings in the form of a dividend. Public Service Enterprise Group pays out 59.8% 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. CMS Energy has increased its dividend for 1 consecutive years and Public Service Enterprise Group has increased its dividend for 1 consecutive years. Public Service Enterprise Group is clearly the better dividend stock, given its higher yield and lower payout ratio.
Volatility & Risk
CMS Energy has a beta of 0.11, indicating that its stock price is 89% less volatile than the S&P 500. Comparatively, Public Service Enterprise Group has a beta of 0.49, indicating that its stock price is 51% less volatile than the S&P 500.
Analyst Recommendations
This is a breakdown of recent recommendations and price targets for CMS Energy and Public Service Enterprise Group, as provided by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score |
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CMS Energy | 1 | 5 | 5 | 0 | 2.36 |
Public Service Enterprise Group | 0 | 4 | 9 | 0 | 2.69 |
CMS Energy currently has a consensus price target of $65.35, indicating a potential upside of 19.75%. Public Service Enterprise Group has a consensus price target of $63.9167, indicating a potential upside of 14.04%. Given CMS Energy's higher probable upside, analysts plainly believe CMS Energy is more favorable than Public Service Enterprise Group.
Institutional & Insider Ownership
90.2% of CMS Energy shares are owned by institutional investors. Comparatively, 69.6% of Public Service Enterprise Group shares are owned by institutional investors. 0.5% of CMS Energy shares are owned by insiders. Comparatively, 0.5% of Public Service Enterprise Group shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.
Profitability
This table compares CMS Energy and Public Service Enterprise Group's net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets |
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CMS Energy | 11.44% | 14.92% | 2.85% |
Public Service Enterprise Group | 19.74% | 11.30% | 3.58% |
Earnings and Valuation
This table compares CMS Energy and Public Service Enterprise Group's revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio |
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CMS Energy | $6.85 billion | 2.30 | $680 million | $2.49 | 21.92 |
Public Service Enterprise Group | $10.08 billion | 2.81 | $1.69 billion | $3.28 | 17.09 |
Public Service Enterprise Group has higher revenue and earnings than CMS Energy. Public Service Enterprise Group is trading at a lower price-to-earnings ratio than CMS Energy, indicating that it is currently the more affordable of the two stocks.
Summary
Public Service Enterprise Group beats CMS Energy on 11 of the 16 factors compared between the two stocks.