Pinnacle West Capital Corporation (NYSE: PNW) and Eversource Energy (NYSE:ES) are both large-cap utilities companies, but which is the better business? We will contrast the two businesses based on the strength of their valuation, dividends, profitability, earnings, analyst recommendations, risk and institutional ownership.

Profitability

This table compares Pinnacle West Capital Corporation and Eversource Energy’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Pinnacle West Capital Corporation 14.37% 10.20% 3.14%
Eversource Energy 12.81% 9.15% 3.07%

Volatility & Risk

Pinnacle West Capital Corporation has a beta of 0.37, suggesting that its share price is 63% less volatile than the S&P 500. Comparatively, Eversource Energy has a beta of 0.28, suggesting that its share price is 72% less volatile than the S&P 500.

Dividends

Pinnacle West Capital Corporation pays an annual dividend of $2.62 per share and has a dividend yield of 2.9%. Eversource Energy pays an annual dividend of $1.90 per share and has a dividend yield of 3.0%. Pinnacle West Capital Corporation pays out 58.0% of its earnings in the form of a dividend. Eversource Energy pays out 61.5% 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. Pinnacle West Capital Corporation has raised its dividend for 5 consecutive years.

Insider & Institutional Ownership

85.9% of Pinnacle West Capital Corporation shares are held by institutional investors. Comparatively, 71.3% of Eversource Energy shares are held by institutional investors. 0.7% of Pinnacle West Capital Corporation shares are held by company insiders. Comparatively, 0.5% of Eversource Energy shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Valuation and Earnings

This table compares Pinnacle West Capital Corporation and Eversource Energy’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Pinnacle West Capital Corporation $3.53 billion 2.81 $1.53 billion $4.52 19.66
Eversource Energy $7.68 billion 2.58 $2.63 billion $3.09 20.21

Eversource Energy has higher revenue and earnings than Pinnacle West Capital Corporation. Pinnacle West Capital Corporation is trading at a lower price-to-earnings ratio than Eversource Energy, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a summary of recent ratings and recommmendations for Pinnacle West Capital Corporation and Eversource Energy, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Pinnacle West Capital Corporation 1 7 0 0 1.88
Eversource Energy 0 6 3 0 2.33

Pinnacle West Capital Corporation currently has a consensus price target of $81.71, suggesting a potential downside of 8.06%. Eversource Energy has a consensus price target of $62.69, suggesting a potential upside of 0.36%. Given Eversource Energy’s stronger consensus rating and higher probable upside, analysts clearly believe Eversource Energy is more favorable than Pinnacle West Capital Corporation.

Summary

Pinnacle West Capital Corporation beats Eversource Energy on 10 of the 17 factors compared between the two stocks.

Pinnacle West Capital Corporation Company Profile

Pinnacle West Capital Corporation is a holding company that operates through its subsidiaries. The Company operates through regulated electricity segment, which consists of traditional regulated retail and wholesale electricity businesses and related activities, and includes electricity generation, transmission and distribution. It owned and leased 6,236 megawatt (MW) of regulated generation capacity and the Company held a mix of both long-term and short-term purchased power agreements for additional capacity, including agreements for the purchase of renewable energy, as of December 31, 2016. Its subsidiaries include Arizona Public Service Company, which is a vertically-integrated electric utility that provides retail or wholesale electric service to the State of Arizona, with the exceptions of about one-half of the Phoenix metropolitan area, the Tucson metropolitan area and Mohave County in northwestern Arizona.

Eversource Energy Company Profile

Eversource Energy is a utility holding company engaged in the energy delivery business. The Company operates through three segments: electric distribution, electric transmission and natural gas distribution. The Company’s electric distribution segment consists of the distribution businesses, which are engaged in the distribution of electricity to retail customers in Connecticut, eastern Massachusetts, New Hampshire and western Massachusetts, and the regulated electric generation businesses. Its electric transmission segment owns and maintains transmission facilities that are part of an interstate power transmission grid over which electricity is transmitted throughout New England. Its electric distribution segment consists of the distribution businesses of The Connecticut Light and Power Company (CL&P), NSTAR Electric Company (NSTAR Electric), Public Service Company of New Hampshire (PSNH) and Western Massachusetts Electric Company (WMECO).

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