The AES Corporation (NYSE: AES) and Xcel Energy (NYSE:XEL) are both mid-cap utilities companies, but which is the better stock? We will contrast the two companies based on the strength of their dividends, profitability, earnings, valuation, analyst recommendations, risk and institutional ownership.

Profitability

This table compares The AES Corporation and Xcel Energy’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
The AES Corporation -5.30% 15.86% 2.57%
Xcel Energy 10.08% 10.42% 2.80%

Analyst Ratings

This is a summary of current recommendations and price targets for The AES Corporation and Xcel Energy, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
The AES Corporation 1 4 0 0 1.80
Xcel Energy 0 8 1 0 2.11

The AES Corporation currently has a consensus target price of $12.00, suggesting a potential upside of 7.05%. Xcel Energy has a consensus target price of $46.89, suggesting a potential downside of 6.65%. Given The AES Corporation’s higher probable upside, research analysts clearly believe The AES Corporation is more favorable than Xcel Energy.

Valuation & Earnings

This table compares The AES Corporation and Xcel Energy’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
The AES Corporation $14.05 billion 0.53 $3.58 billion ($1.14) -9.83
Xcel Energy $11.43 billion 2.23 $3.76 billion $2.27 22.13

Xcel Energy has higher revenue, but lower earnings than The AES Corporation. The AES Corporation is trading at a lower price-to-earnings ratio than Xcel Energy, indicating that it is currently the more affordable of the two stocks.

Volatility & Risk

The AES Corporation has a beta of 1.22, suggesting that its stock price is 22% more volatile than the S&P 500. Comparatively, Xcel Energy has a beta of 0.2, suggesting that its stock price is 80% less volatile than the S&P 500.

Insider and Institutional Ownership

93.2% of The AES Corporation shares are held by institutional investors. Comparatively, 73.0% of Xcel Energy shares are held by institutional investors. 1.1% of The AES Corporation shares are held by company insiders. Comparatively, 0.2% of Xcel Energy shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Dividends

The AES Corporation pays an annual dividend of $0.48 per share and has a dividend yield of 4.3%. Xcel Energy pays an annual dividend of $1.44 per share and has a dividend yield of 2.9%. The AES Corporation pays out -42.1% of its earnings in the form of a dividend. Xcel Energy pays out 63.4% 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. The AES Corporation has increased its dividend for 13 consecutive years and Xcel Energy has increased its dividend for 4 consecutive years. The AES Corporation is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

The AES Corporation beats Xcel Energy on 9 of the 17 factors compared between the two stocks.

The AES Corporation Company Profile

The AES Corporation is a holding company. The Company, through its subsidiaries and affiliates, operates a diversified portfolio of electricity generation and distribution businesses. It is organized into six strategic business units (SBUs): the United States; Andes; Brazil; Mexico, Central America and the Caribbean (MCAC); Europe, and Asia. As of December 31, 2016, its United States SBU had 18 generation facilities and two integrated utilities in the United States. As of December 31, 2016, its Andes SBU had generation facilities in three countries. Its Brazil SBU has generation and distribution businesses, Eletropaulo and Tiete. As of December 31, 2016, its MCAC SBU had a portfolio of distribution businesses and generation facilities, including renewable energy, in five countries. As of December 31, 2016, its Europe SBU had generation facilities in five countries. As of December 31, 2016, its Asia SBU had generation facilities in three countries.

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.

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