Head to Head Analysis: PPL (NYSE:PPL) and Pacific Gas & Electric (NYSE:PCG)

Pacific Gas & Electric (NYSE:PCG) and PPL (NYSE:PPL) are both large-cap utilities companies, but which is the superior investment? We will contrast the two companies based on the strength of their valuation, dividends, profitability, risk, earnings, analyst recommendations and institutional ownership.

Risk & Volatility

Pacific Gas & Electric has a beta of 0.28, suggesting that its stock price is 72% less volatile than the S&P 500. Comparatively, PPL has a beta of 0.56, suggesting that its stock price is 44% less volatile than the S&P 500.

Earnings and Valuation

This table compares Pacific Gas & Electric and PPL”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Pacific Gas & Electric	$24.93 billion	1.41	$2.70 billion	$1.38	9.50
PPL	$9.04 billion	2.93	$1.18 billion	$1.69	20.84

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

Profitability

This table compares Pacific Gas & Electric and PPL’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Pacific Gas & Electric	12.25%	12.48%	2.78%
PPL	13.47%	9.33%	3.05%

Dividends

Pacific Gas & Electric pays an annual dividend of $0.20 per share and has a dividend yield of 1.5%. PPL pays an annual dividend of $1.14 per share and has a dividend yield of 3.2%. Pacific Gas & Electric pays out 14.5% of its earnings in the form of a dividend. PPL pays out 67.5% 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. Pacific Gas & Electric has increased its dividend for 1 consecutive years and PPL has increased its dividend for 3 consecutive years. PPL is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Recommendations

This is a breakdown of current recommendations and price targets for Pacific Gas & Electric and PPL, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Pacific Gas & Electric	0	9	3	0	2.25
PPL	0	4	9	1	2.79

Pacific Gas & Electric currently has a consensus target price of $17.27, indicating a potential upside of 31.78%. PPL has a consensus target price of $40.00, indicating a potential upside of 13.57%. Given Pacific Gas & Electric’s higher probable upside, analysts clearly believe Pacific Gas & Electric is more favorable than PPL.

Insider & Institutional Ownership

78.6% of Pacific Gas & Electric shares are owned by institutional investors. Comparatively, 77.0% of PPL shares are owned by institutional investors. 0.2% of Pacific Gas & Electric shares are owned by insiders. Comparatively, 0.3% of PPL shares are owned by 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.

Summary

PPL beats Pacific Gas & Electric on 12 of the 18 factors compared between the two stocks.

About Pacific Gas & Electric

PG&E Corp. operates as a holding company, which engages in generation, transmission, and distribution of electricity and natural gas to customers. It specializes in energy, utility, power, gas, electricity, solar and sustainability. The company was founded in 1995 and is headquartered in Oakland, CA.

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.