The Southern (NYSE:SO) and FirstEnergy (NYSE:FE) are both large-cap utilities companies, but which is the superior stock? We will contrast the two companies based on the strength of their earnings, risk, profitability, dividends, valuation, analyst recommendations and institutional ownership.
Dividends
The Southern pays an annual dividend of $2.56 per share and has a dividend yield of 4.0%. FirstEnergy pays an annual dividend of $1.56 per share and has a dividend yield of 4.4%. The Southern pays out 82.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. FirstEnergy pays out 60.5% of its earnings in the form of a dividend. The Southern has increased its dividend for 19 consecutive years and FirstEnergy has increased its dividend for 1 consecutive years. FirstEnergy is clearly the better dividend stock, given its higher yield and lower payout ratio.
Valuation & Earnings
This table compares The Southern and FirstEnergy's revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio |
---|
The Southern | $21.42 billion | 3.15 | $4.75 billion | $3.11 | 20.54 |
FirstEnergy | $11.04 billion | 1.73 | $912 million | $2.58 | 13.63 |
The Southern has higher revenue and earnings than FirstEnergy. FirstEnergy is trading at a lower price-to-earnings ratio than The Southern, indicating that it is currently the more affordable of the two stocks.
Profitability
This table compares The Southern and FirstEnergy's net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets |
---|
The Southern | 15.80% | 10.08% | 2.69% |
FirstEnergy | 6.64% | 20.15% | 3.34% |
Institutional and Insider Ownership
57.6% of The Southern shares are owned by institutional investors. Comparatively, 80.0% of FirstEnergy shares are owned by institutional investors. 0.4% of The Southern shares are owned by insiders. Comparatively, 0.3% of FirstEnergy shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.
Volatility & Risk
The Southern has a beta of 0.39, indicating that its share price is 61% less volatile than the S&P 500. Comparatively, FirstEnergy has a beta of 0.2, indicating that its share price is 80% less volatile than the S&P 500.
Analyst Ratings
This is a summary of recent recommendations for The Southern and FirstEnergy, as provided by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score |
---|
The Southern | 3 | 2 | 8 | 0 | 2.38 |
FirstEnergy | 1 | 6 | 6 | 0 | 2.38 |
The Southern presently has a consensus price target of $65.1538, suggesting a potential upside of 1.98%. FirstEnergy has a consensus price target of $39.5833, suggesting a potential upside of 12.58%. Given FirstEnergy's higher probable upside, analysts clearly believe FirstEnergy is more favorable than The Southern.
Summary
The Southern beats FirstEnergy on 9 of the 16 factors compared between the two stocks.