Head to Head Review: Duke Energy (NYSE:DUK) & PPL (NYSE:PPL)

PPL (NYSE:PPL) and Duke Energy (NYSE:DUK) are both large-cap utilities companies, but which is the superior business? We will contrast the two companies based on the strength of their risk, valuation, institutional ownership, earnings, dividends, profitability and analyst recommendations.

Analyst Recommendations

This is a breakdown of recent ratings for PPL and Duke Energy, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
PPL	0	4	9	1	2.79
Duke Energy	0	8	10	0	2.56

PPL presently has a consensus target price of $40.21, indicating a potential upside of 18.64%. Duke Energy has a consensus target price of $136.62, indicating a potential upside of 18.42%. Given PPL’s stronger consensus rating and higher possible upside, research analysts plainly believe PPL is more favorable than Duke Energy.

Insider and Institutional Ownership

77.0% of PPL shares are held by institutional investors. Comparatively, 65.3% of Duke Energy shares are held by institutional investors. 0.3% of PPL shares are held by company insiders. Comparatively, 0.1% of Duke Energy shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Profitability

This table compares PPL and Duke Energy’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
PPL	13.47%	9.33%	3.05%
Duke Energy	15.78%	9.78%	2.67%

Earnings and Valuation

This table compares PPL and Duke Energy”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
PPL	$9.04 billion	2.82	$1.18 billion	$1.69	20.06
Duke Energy	$32.24 billion	2.79	$4.97 billion	$6.66	17.32

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

Dividends

PPL pays an annual dividend of $1.14 per share and has a dividend yield of 3.4%. Duke Energy pays an annual dividend of $4.34 per share and has a dividend yield of 3.8%. PPL pays out 67.5% of its earnings in the form of a dividend. Duke Energy pays out 65.2% 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. PPL has raised its dividend for 3 consecutive years and Duke Energy has raised its dividend for 20 consecutive years. Duke Energy is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Risk & Volatility

PPL has a beta of 0.56, meaning that its share price is 44% less volatile than the S&P 500. Comparatively, Duke Energy has a beta of 0.36, meaning that its share price is 64% less volatile than the S&P 500.

About PPL

PPL Corporation, an energy company, focuses on providing electricity and natural gas to approximately 3.6 million customers in the United States. It operates through three segments: Kentucky Regulated, Pennsylvania Regulated, and Rhode Island Regulated. The company delivers electricity to customers in Pennsylvania, Kentucky, Virginia, and Rhode Island; delivers natural gas to customers in Kentucky and Rhode Island; and generates electricity from power plants in Kentucky. PPL Corporation was founded in 1920 and is headquartered in Allentown, Pennsylvania.

About Duke Energy

Duke Energy Corporation, together with its subsidiaries, operates as an energy company in the United States. It operates through two segments: Electric Utilities and Infrastructure (EU&I), and Gas Utilities and Infrastructure (GU&I). The EU&I segment generates, transmits, distributes, and sells electricity in the Carolinas, Florida, and the Midwest. It generates electricity through coal, hydroelectric, natural gas, oil, solar and wind sources, renewables, and nuclear fuel. This segment also engages in the wholesale of electricity to municipalities, electric cooperative utilities, and load-serving entities. The GU&I segment distributes natural gas to residential, commercial, industrial, and power generation natural gas customers; and invests in pipeline transmission projects, renewable natural gas projects, and natural gas storage facilities. The company was formerly known as Duke Energy Holding Corp. and changed its name to Duke Energy Corporation in April 2006. Duke Energy Corporation was founded in 1904 and is headquartered in Charlotte, North Carolina.