Critical Review: NiSource (NI) & PPL Corporation (PPL)
NiSource (NYSE: NI) and PPL Corporation (NYSE:PPL) are both mid-cap utilities companies, but which is the better stock? We will contrast the two businesses based on the strength of their risk, dividends, profitability, earnings, valuation, institutional ownership and analyst recommendations.
This is a summary of recent ratings and price targets for NiSource and PPL Corporation, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
NiSource currently has a consensus price target of $26.43, indicating a potential downside of 2.51%. PPL Corporation has a consensus price target of $38.36, indicating a potential downside of 3.11%. Given NiSource’s stronger consensus rating and higher possible upside, equities analysts plainly believe NiSource is more favorable than PPL Corporation.
NiSource pays an annual dividend of $0.70 per share and has a dividend yield of 2.6%. PPL Corporation pays an annual dividend of $1.58 per share and has a dividend yield of 4.0%. NiSource pays out 81.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. PPL Corporation pays out 66.1% of its earnings in the form of a dividend. NiSource has increased its dividend for 5 consecutive years. PPL Corporation is clearly the better dividend stock, given its higher yield and lower payout ratio.
Institutional & Insider Ownership
82.2% of NiSource shares are owned by institutional investors. Comparatively, 71.0% of PPL Corporation shares are owned by institutional investors. 0.4% of NiSource shares are owned by insiders. Comparatively, 0.4% of PPL Corporation shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.
Earnings and Valuation
This table compares NiSource and PPL Corporation’s gross revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|NiSource||$4.75 billion||1.86||$1.40 billion||$0.86||31.52|
|PPL Corporation||$7.40 billion||3.67||$4.04 billion||$2.39||16.56|
PPL Corporation has higher revenue and earnings than NiSource. PPL Corporation is trading at a lower price-to-earnings ratio than NiSource, indicating that it is currently the more affordable of the two stocks.
Risk & Volatility
NiSource has a beta of 0.37, suggesting that its stock price is 63% less volatile than the S&P 500. Comparatively, PPL Corporation has a beta of 0.49, suggesting that its stock price is 51% less volatile than the S&P 500.
This table compares NiSource and PPL Corporation’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
PPL Corporation beats NiSource on 11 of the 17 factors compared between the two stocks.
NiSource Inc. is an energy holding company. The Company is engaged in the distribution of natural gas. The Company operates through two business segments: Gas Distribution Operations and Electric Operations. The Company’s Gas Distribution Operations segment provides natural gas service and transportation for residential, commercial and industrial customers in Ohio, Pennsylvania, Virginia, Kentucky, Maryland, Indiana and Massachusetts. As of December 31, 2016, the Company’s Electric Operations segment provided electric services in 20 counties in the northern part of Indiana. The Company’s electric operations segment generated, transmitted and distributed electricity through the Company’s subsidiary NIPSCO to approximately 466,000 customers in 20 counties in the northern part of Indiana and engaged in wholesale and transmission transactions, as of December 31, 2016. NIPSCO owned and operated three coal-fired electric generating stations, as of December 31, 2016.
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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