Vectren Corporation (NYSE: VVC) and WGL Holdings (NYSE:WGL) are both mid-cap utilities companies, but which is the superior stock? We will contrast the two businesses based on the strength of their risk, earnings, valuation, institutional ownership, analyst recommendations, dividends and profitability.

Earnings & Valuation

This table compares Vectren Corporation and WGL Holdings’ revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Vectren Corporation $2.59 billion 2.18 $668.60 million $2.70 25.23
WGL Holdings $2.39 billion 1.82 $465.84 million $3.51 24.13

Vectren Corporation has higher revenue and earnings than WGL Holdings. WGL Holdings is trading at a lower price-to-earnings ratio than Vectren Corporation, indicating that it is currently the more affordable of the two stocks.

Volatility & Risk

Vectren Corporation has a beta of 0.81, indicating that its share price is 19% less volatile than the S&P 500. Comparatively, WGL Holdings has a beta of 0.69, indicating that its share price is 31% less volatile than the S&P 500.

Institutional and Insider Ownership

63.8% of Vectren Corporation shares are held by institutional investors. Comparatively, 69.1% of WGL Holdings shares are held by institutional investors. 0.1% of Vectren Corporation shares are held by company insiders. Comparatively, 1.0% of WGL Holdings shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Profitability

This table compares Vectren Corporation and WGL Holdings’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Vectren Corporation 8.66% 12.65% 3.90%
WGL Holdings 7.60% 11.76% 2.73%

Analyst Recommendations

This is a summary of current ratings and recommmendations for Vectren Corporation and WGL Holdings, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Vectren Corporation 0 0 3 0 3.00
WGL Holdings 0 4 0 0 2.00

Vectren Corporation currently has a consensus target price of $66.00, indicating a potential downside of 3.10%. WGL Holdings has a consensus target price of $71.00, indicating a potential downside of 16.18%. Given Vectren Corporation’s stronger consensus rating and higher possible upside, equities analysts clearly believe Vectren Corporation is more favorable than WGL Holdings.

Dividends

Vectren Corporation pays an annual dividend of $1.68 per share and has a dividend yield of 2.5%. WGL Holdings pays an annual dividend of $2.04 per share and has a dividend yield of 2.4%. Vectren Corporation pays out 62.2% of its earnings in the form of a dividend. WGL Holdings pays out 58.1% 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. Vectren Corporation has raised its dividend for 57 consecutive years and WGL Holdings has raised its dividend for 40 consecutive years. Vectren Corporation is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

Vectren Corporation beats WGL Holdings on 13 of the 17 factors compared between the two stocks.

About Vectren Corporation

Vectren Corporation (Vectren) is an energy holding company. The Company segregates its operations into groups, including the Utility Group, the Nonutility Group, and Corporate and Other. The Company’s subsidiary, Vectren Utility Holdings, Inc. (Utility Holdings or VUHI), serves as the intermediate holding company for three public utilities: Indiana Gas Company, Inc. (Indiana Gas), Southern Indiana Gas and Electric Company (SIGECO) and Vectren Energy Delivery of Ohio, Inc. (VEDO). The Company, through Vectren Enterprises Inc. (Enterprises), is involved in non-utility activities in two primary business areas: Infrastructure Services and Energy Services. Infrastructure Services provides underground pipeline construction and repair services. Energy Services provides energy performance contracting and sustainable infrastructure, such as renewables, distributed generation, and combined heat and power projects.

About WGL Holdings

WGL Holdings, Inc. (WGL) is a holding company. The Company operates through four segments. The Regulated Utility segment consists of Washington Gas Light Company, which provides regulated gas distribution services to end use customers and natural gas transportation services to an unaffiliated natural gas distribution company and Hampshire Gas Company, which provides regulated interstate natural gas storage services. The Retail Energy-Marketing segment consists of the operations of WGL Energy Services, Inc., which sells natural gas and electricity directly to retail customers. The Commercial Energy Systems segment consists of the operations of WGL Energy Systems, Inc., WGSW, Inc. and the results of operations of affiliate-owned commercial distributed energy projects. The Midstream Energy Services segment consists of the operations of WGL Midstream, Inc., which engages in acquiring, investing in, managing and optimizing natural gas storage and transportation assets.

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