Analyzing Ameren Corporation (AEE) & PPL Corporation (PPL)
Ameren Corporation (NYSE: AEE) and PPL Corporation (NYSE:PPL) are both large-cap utilities companies, but which is the better investment? We will contrast the two businesses based on the strength of their risk, valuation, analyst recommendations, institutional ownership, earnings, profitability and dividends.
This table compares Ameren Corporation and PPL Corporation’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
Ameren Corporation pays an annual dividend of $1.76 per share and has a dividend yield of 2.9%. PPL Corporation pays an annual dividend of $1.58 per share and has a dividend yield of 4.0%. Ameren Corporation pays out 61.5% of its earnings in the form of a dividend. PPL Corporation pays out 66.1% 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. Ameren Corporation has increased its dividend for 3 consecutive years and PPL Corporation has increased its dividend for 5 consecutive years. PPL Corporation is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Risk and Volatility
Ameren Corporation has a beta of 0.36, meaning that its stock price is 64% less volatile than the S&P 500. Comparatively, PPL Corporation has a beta of 0.49, meaning that its stock price is 51% less volatile than the S&P 500.
This is a summary of recent recommendations for Ameren Corporation and PPL Corporation, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
Ameren Corporation presently has a consensus price target of $55.33, indicating a potential downside of 8.34%. PPL Corporation has a consensus price target of $38.36, indicating a potential downside of 3.11%. Given PPL Corporation’s stronger consensus rating and higher probable upside, analysts clearly believe PPL Corporation is more favorable than Ameren Corporation.
Earnings and Valuation
This table compares Ameren Corporation and PPL Corporation’s gross revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Ameren Corporation||$6.06 billion||2.42||$2.44 billion||$2.86||21.11|
|PPL Corporation||$7.40 billion||3.67||$4.04 billion||$2.39||16.56|
PPL Corporation has higher revenue and earnings than Ameren Corporation. PPL Corporation is trading at a lower price-to-earnings ratio than Ameren Corporation, indicating that it is currently the more affordable of the two stocks.
Institutional and Insider Ownership
71.1% of Ameren Corporation shares are owned by institutional investors. Comparatively, 71.0% of PPL Corporation shares are owned by institutional investors. 0.4% of Ameren Corporation shares are owned by insiders. Comparatively, 0.4% of PPL Corporation shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.
PPL Corporation beats Ameren Corporation on 13 of the 17 factors compared between the two stocks.
About Ameren Corporation
Ameren Corporation is a utility holding company. The Company’s subsidiaries include Ameren Missouri, Ameren Illinois and Ameren Transmission Company (ATXI). It operates through four segments. The Ameren Missouri segment includes all of the operations of Ameren Missouri. The Ameren Illinois Electric Distribution segment consists of the electric distribution business of Ameren Illinois. The Ameren Illinois Natural Gas segment consists of the natural gas business of Ameren Illinois. The ATXI segment consists of the aggregated electric transmission businesses of Ameren Illinois and ATXI. Ameren Missouri operates a rate-regulated electric generation, transmission, and distribution business and a rate-regulated natural gas distribution business in Missouri. Ameren Illinois operates rate-regulated electric distribution, electric transmission and natural gas distribution businesses in Illinois. ATXI operates a Federal Energy Regulatory Commission rate-regulated electric transmission business.
About PPL Corporation
PPL Corporation (PPL) is a utility holding company. Through its subsidiaries, PPL delivers electricity to customers in the United Kingdom, Pennsylvania, Kentucky, Virginia and Tennessee; delivers natural gas to customers in Kentucky, and generates electricity from power plants in Kentucky. PPL operates through U.K. Regulated Segment, Kentucky Regulated Segment and Pennsylvania Regulated Segment. The U.K. Regulated Segment consists of PPL Global, which includes PPL WPD Limited’s (WPD) regulated electricity distribution operations, the results of hedging the translation of WPD’s earnings from British pound sterling into United States dollars, and certain costs, such as the United States income taxes, administrative costs and allocated financing costs. Kentucky Regulated segment consists of the operations of Louisville Gas and Electric Company (LG&E) and KU Energy LLC (LKE). The Pennsylvania Regulated segment consists of PPL Electric Utilities Corporation (PPL Electric).
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