Xcel Energy (NYSE: XEL) and Pacific Gas & Electric Co. (NYSE:PCG) are both large-cap utilities companies, but which is the superior investment? We will contrast the two companies based on the strength of their analyst recommendations, dividends, earnings, profitability, valuation, institutional ownership and risk.

Profitability

This table compares Xcel Energy and Pacific Gas & Electric Co.’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Xcel Energy 10.08% 10.42% 2.80%
Pacific Gas & Electric Co. 11.48% 11.63% 3.11%

Analyst Recommendations

This is a summary of current ratings for Xcel Energy and Pacific Gas & Electric Co., as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Xcel Energy 0 8 2 0 2.20
Pacific Gas & Electric Co. 0 3 6 0 2.67

Xcel Energy presently has a consensus target price of $46.90, suggesting a potential downside of 5.99%. Pacific Gas & Electric Co. has a consensus target price of $69.50, suggesting a potential downside of 1.15%. Given Pacific Gas & Electric Co.’s stronger consensus rating and higher possible upside, analysts plainly believe Pacific Gas & Electric Co. is more favorable than Xcel Energy.

Dividends

Xcel Energy pays an annual dividend of $1.44 per share and has a dividend yield of 2.9%. Pacific Gas & Electric Co. pays an annual dividend of $2.12 per share and has a dividend yield of 3.0%. Xcel Energy pays out 63.4% of its earnings in the form of a dividend. Pacific Gas & Electric Co. pays out 52.3% 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. Xcel Energy has raised its dividend for 13 consecutive years. Pacific Gas & Electric Co. is clearly the better dividend stock, given its higher yield and lower payout ratio.

Volatility & Risk

Xcel Energy has a beta of 0.2, meaning that its share price is 80% less volatile than the S&P 500. Comparatively, Pacific Gas & Electric Co. has a beta of 0.22, meaning that its share price is 78% less volatile than the S&P 500.

Valuation & Earnings

This table compares Xcel Energy and Pacific Gas & Electric Co.’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Xcel Energy $11.43 billion 2.22 $3.76 billion $2.27 21.98
Pacific Gas & Electric Co. $18.04 billion 2.00 $6.53 billion $4.05 17.36

Pacific Gas & Electric Co. has higher revenue and earnings than Xcel Energy. Pacific Gas & Electric Co. is trading at a lower price-to-earnings ratio than Xcel Energy, indicating that it is currently the more affordable of the two stocks.

Institutional and Insider Ownership

73.0% of Xcel Energy shares are held by institutional investors. Comparatively, 80.9% of Pacific Gas & Electric Co. shares are held by institutional investors. 0.2% of Xcel Energy shares are held by insiders. Comparatively, 0.2% of Pacific Gas & Electric Co. shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Summary

Pacific Gas & Electric Co. beats Xcel Energy on 13 of the 17 factors compared between the two stocks.

Xcel Energy Company Profile

Xcel Energy Inc. is a public utility holding company. The Company’s operations include the activity of four utility subsidiaries that serve electric and natural gas customers in eight states. The Company’s segments include regulated electric utility, regulated natural gas utility and all other. The Company’s utility subsidiaries include NSP-Minnesota, NSP-Wisconsin, Public Service Company of Colorado (PSCo) and Southwestern Public Service Co. (SPS), which serve customers in portions of Colorado, Michigan, Minnesota, New Mexico, North Dakota, South Dakota, Texas and Wisconsin. Along with WYCO Development LLC (WYCO), a joint venture formed with Colorado Interstate Gas Company, LLC (CIG) to develop and lease natural gas pipelines storage and compression facilities, and WestGas InterState, Inc. (WGI), an interstate natural gas pipeline company, these companies comprise the regulated utility operations.

Pacific Gas & Electric Co. Company Profile

PG&E Corporation is a holding company. The Company’s primary operating subsidiary is Pacific Gas and Electric Company (the Utility), which operates in northern and central California. The Utility is engaged in the sale and delivery of electricity and natural gas to customers. The Utility generates electricity and provides electricity transmission and distribution services throughout its service territory in northern and central California to residential, commercial, industrial, and agricultural customers. The Utility provides bundled services (electricity, transmission and distribution services) to various customers in its service territory. As of December 31, 2016, the Utility owned approximately 18,400 circuit miles of interconnected transmission lines operating at voltages ranging from 60 kilovolt to 500 kilovolt. As of December 31, 2016, the Utility also operated 92 electric transmission substations with a capacity of approximately 64,600 megavolt ampere (MVA).

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