Exelon (NASDAQ:EXC) vs. AES (NYSE:AES) Financial Analysis

AES (NYSE:AES) and Exelon (NASDAQ:EXC) are both large-cap utilities companies, but which is the better business? We will compare the two businesses based on the strength of their valuation, risk, analyst recommendations, earnings, dividends, institutional ownership and profitability.

Institutional & Insider Ownership

93.1% of AES shares are held by institutional investors. Comparatively, 80.9% of Exelon shares are held by institutional investors. 0.6% of AES shares are held by company insiders. Comparatively, 0.1% of Exelon shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Risk and Volatility

AES has a beta of 0.98, suggesting that its stock price is 2% less volatile than the S&P 500. Comparatively, Exelon has a beta of 0.46, suggesting that its stock price is 54% less volatile than the S&P 500.

Dividends

AES pays an annual dividend of $0.70 per share and has a dividend yield of 4.9%. Exelon pays an annual dividend of $1.60 per share and has a dividend yield of 3.6%. AES pays out 43.8% of its earnings in the form of a dividend. Exelon pays out 57.3% 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. AES has increased its dividend for 12 consecutive years and Exelon has increased its dividend for 3 consecutive years. AES is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Ratings

This is a summary of recent ratings for AES and Exelon, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
AES	1	4	7	0	2.50
Exelon	2	6	6	1	2.40

AES presently has a consensus target price of $23.83, indicating a potential upside of 67.96%. Exelon has a consensus target price of $49.85, indicating a potential upside of 11.44%. Given AES’s stronger consensus rating and higher probable upside, analysts clearly believe AES is more favorable than Exelon.

Profitability

This table compares AES and Exelon’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
AES	9.47%	18.83%	3.04%
Exelon	11.60%	10.28%	2.57%

Earnings and Valuation

This table compares AES and Exelon”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
AES	$12.28 billion	0.82	$1.68 billion	$1.60	8.87
Exelon	$23.03 billion	1.96	$2.46 billion	$2.79	16.03

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

Summary

AES beats Exelon on 11 of the 18 factors compared between the two stocks.

About AES

The AES Corporation, together with its subsidiaries, operates as a diversified power generation and utility company in the United States and internationally. The company owns and/or operates power plants to generate and sell power to customers, such as utilities, industrial users, and other intermediaries; owns and/or operates utilities to generate or purchase, distribute, transmit, and sell electricity to end-user customers in the residential, commercial, industrial, and governmental sectors; and generates and sells electricity on the wholesale market. It uses various fuels and technologies to generate electricity, such as coal, gas, hydro, wind, solar, and biomass, as well as renewables comprising energy storage and landfill gas. The company owns and/or operates a generation portfolio of approximately 34,596 megawatts and distributes power to 2.6 million customers. The company was formerly known as Applied Energy Services, Inc. and changed its name to The AES Corporation in April 2000. The AES Corporation was incorporated in 1981 and is headquartered in Arlington, Virginia.

About Exelon

Exelon Corporation, a utility services holding company, engages in the energy distribution and transmission businesses in the United States and Canada. The company is involved in the purchase and regulated retail sale of electricity and natural gas, transmission and distribution of electricity, and distribution of natural gas to retail customers. It also offers support services, including legal, human resources, information technology, supply management, financial, engineering, customer operations, transmission and distribution planning, asset management, system operations, and power procurement services. It serves distribution utilities, municipalities, and financial institutions, as well as commercial, industrial, governmental, and residential customers. Exelon Corporation was incorporated in 1999 and is headquartered in Chicago, Illinois.