Southern (NYSE:SO) and EDP-Energias de Portugal, S.A (OTCMKTS:EDPFY) are both large-cap utilities companies, but which is the better investment? We will compare the two businesses based on the strength of their valuation, risk, analyst recommendations, profitability, institutional ownership, dividends and earnings.

Dividends

Southern pays an annual dividend of $2.56 per share and has a dividend yield of 4.9%. EDP-Energias de Portugal, S.A pays an annual dividend of $1.52 per share and has a dividend yield of 3.2%. Southern pays out 82.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Southern has increased its dividend for 18 consecutive years. Southern is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

This table compares Southern and EDP-Energias de Portugal, S.A’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Southern 16.83% 10.57% 2.85%
EDP-Energias de Portugal, S.A 3.95% 7.20% 2.21%

Institutional & Insider Ownership

58.9% of Southern shares are held by institutional investors. Comparatively, 0.1% of EDP-Energias de Portugal, S.A shares are held by institutional investors. 0.4% of Southern 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.

Volatility & Risk

Southern has a beta of 0.44, meaning that its share price is 56% less volatile than the S&P 500. Comparatively, EDP-Energias de Portugal, S.A has a beta of 0.59, meaning that its share price is 41% less volatile than the S&P 500.

Earnings & Valuation

This table compares Southern and EDP-Energias de Portugal, S.A’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Southern $21.42 billion 2.56 $4.75 billion $3.11 16.67
EDP-Energias de Portugal, S.A $18.04 billion 0.97 $613.16 million N/A N/A

Southern has higher revenue and earnings than EDP-Energias de Portugal, S.A.

Analyst Recommendations

This is a summary of current ratings for Southern and EDP-Energias de Portugal, S.A, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Southern 3 9 3 0 2.00
EDP-Energias de Portugal, S.A 0 1 1 1 3.00

Southern presently has a consensus target price of $62.18, suggesting a potential upside of 19.92%. Given Southern’s higher possible upside, analysts clearly believe Southern is more favorable than EDP-Energias de Portugal, S.A.

Summary

Southern beats EDP-Energias de Portugal, S.A on 12 of the 16 factors compared between the two stocks.

About Southern

The Southern Company, through its subsidiaries, engages in the generation, transmission, and distribution of electricity. It operates in four segments: Gas Distribution Operations, Gas Pipeline Investments, Wholesale Gas Services, and Gas Marketing Services. The company also constructs, acquires, owns, and manages power generation assets, including renewable energy facilities and sells electricity in the wholesale market; and distributes natural gas in Illinois, Georgia, Virginia, and Tennessee, as well as provides gas marketing services, wholesale gas services, and gas pipeline investments operations. It owns and/or operates 33 hydroelectric generating stations, 26 fossil fuel generating stations, 3 nuclear generating stations, 13 combined cycle/cogeneration stations, 40 solar facilities, 9 wind facilities, and 1 biomass facility; and constructs, operates, and maintains 75,200 miles of natural gas pipelines and 14 storage facilities with total capacity of 158 Bcf to provide natural gas to residential, commercial, and industrial customers. The company serves approximately 9 million electric and gas utility customers. It also provides products and services in the areas of distributed generation infrastructure, energy efficiency, and utility infrastructure. In addition, the company offers digital wireless communications services with various communication options, including push to talk, cellular service, text messaging, wireless Internet access, and wireless data. The Southern Company was founded in 1945 and is headquartered in Atlanta, Georgia.

About EDP-Energias de Portugal, S.A

EDP – Energias de Portugal, S.A. generates, distributes, and supplies electricity in Portugal, Spain, France, Poland, Romania, Brazil, and the United States. It operates through Generation and Supply in Iberia, Regulated Networks in Iberia, EDP Renov├íveis, and EDP Brasil segments. The company primarily generates electricity through hydro, CCGT, coal, mini-hydro, wind, solar, nuclear, and cogeneration sources. It also distributes and supplies gas. The company has an installed capacity of 27 GW; and serves 9,848,384 electricity customers and 1,595,347 gas customers. It also operates 285,121 kilometers of distribution overhead lines; and 54,056 kilometers of distribution underground lines. In addition, the company offers engineering, laboratory tests, professional training, energy, and property management services. EDP – Energias de Portugal, S.A. was founded in 1976 and is headquartered in Lisbon, Portugal.

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