El Paso Electric (EE) and Ormat Technologies (ORA) Critical Analysis
El Paso Electric (NYSE: EE) and Ormat Technologies (NYSE:ORA) are both mid-cap utilities companies, but which is the superior investment? We will compare the two companies based on the strength of their profitability, analyst recommendations, risk, institutional ownership, dividends, valuation and earnings.
This is a breakdown of current ratings and price targets for El Paso Electric and Ormat Technologies, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|El Paso Electric||0||4||0||0||2.00|
El Paso Electric presently has a consensus price target of $53.00, indicating a potential downside of 3.90%. Ormat Technologies has a consensus price target of $65.43, indicating a potential upside of 13.47%. Given Ormat Technologies’ stronger consensus rating and higher possible upside, analysts plainly believe Ormat Technologies is more favorable than El Paso Electric.
Volatility & Risk
El Paso Electric has a beta of 0.48, suggesting that its share price is 52% less volatile than the S&P 500. Comparatively, Ormat Technologies has a beta of 1.2, suggesting that its share price is 20% more volatile than the S&P 500.
Insider and Institutional Ownership
98.0% of El Paso Electric shares are held by institutional investors. Comparatively, 46.4% of Ormat Technologies shares are held by institutional investors. 1.3% of El Paso Electric shares are held by company insiders. Comparatively, 23.0% of Ormat Technologies shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.
El Paso Electric pays an annual dividend of $1.34 per share and has a dividend yield of 2.4%. Ormat Technologies pays an annual dividend of $0.32 per share and has a dividend yield of 0.6%. El Paso Electric pays out 48.4% of its earnings in the form of a dividend. Ormat Technologies pays out 14.6% 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. El Paso Electric has raised its dividend for 5 consecutive years. El Paso Electric is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Earnings and Valuation
This table compares El Paso Electric and Ormat Technologies’ revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|El Paso Electric||$934.44 million||2.40||$360.31 million||$2.77||19.91|
|Ormat Technologies||$720.40 million||3.99||$336.78 million||$2.19||26.33|
El Paso Electric has higher revenue and earnings than Ormat Technologies. El Paso Electric is trading at a lower price-to-earnings ratio than Ormat Technologies, indicating that it is currently the more affordable of the two stocks.
This table compares El Paso Electric and Ormat Technologies’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|El Paso Electric||11.45%||9.95%||3.14%|
Ormat Technologies beats El Paso Electric on 11 of the 17 factors compared between the two stocks.
About El Paso Electric
El Paso Electric Company is a public utility company. As of December 31, 2016, the Company was engaged in the generation, transmission and distribution of electricity in an area of approximately 10,000 square miles in west Texas and southern New Mexico. As of December 31, 2016, the Company owned or had ownership interests in several electrical generating facilities providing it with a generating capability of approximately 2,080 megawatts (MW). The Company’s energy sources consists of nuclear fuel, natural gas, coal, purchased power and generated by Company-owned solar photovoltaic panels. As of December 31, 2016, the Company had power purchase agreements for 107 MW from solar photovoltaic generation facilities. As of December 31, 2016, the Company served approximately 411,100 residential, commercial, industrial, public authority and wholesale customers. The Company distributes electricity to retail customers principally in El Paso, Texas and Las Cruces, New Mexico.
About Ormat Technologies
Ormat Technologies, Inc. is engaged in the geothermal and recovered energy power business. The Company designs, develops, builds, owns and operates geothermal and recovered energy-based power plants. Its equipment manufacturing operations are located in Israel. It conducts its business activities in two business segments: Electricity segment and Product segment. The Electricity segment develops, builds, owns and operates geothermal and recovered energy-based power plants in the United States and geothermal power plants in other countries around the world, and sells the electricity it generates. The Product Segment designs, manufactures and sells equipment for geothermal and recovered energy-based electricity generation and remote power units, and provide services relating to the engineering, procurement, construction, operation and maintenance of geothermal, and recovered energy-based power plants. It manufactures products that produce electricity from recovered energy or waste heat.
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