Critical Analysis: Public Service Enterprise Group (NYSE:PEG) and Sempra Energy (NYSE:SRE)

Sempra Energy (NYSE:SRE) and Public Service Enterprise Group (NYSE:PEG) are both large-cap utilities companies, but which is the better business? We will contrast the two companies based on the strength of their dividends, valuation, analyst recommendations, institutional ownership, risk, profitability and earnings.

Volatility and Risk

Sempra Energy has a beta of 0.57, indicating that its stock price is 43% less volatile than the S&P 500. Comparatively, Public Service Enterprise Group has a beta of 0.51, indicating that its stock price is 49% less volatile than the S&P 500.

Profitability

This table compares Sempra Energy and Public Service Enterprise Group’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Sempra Energy	16.70%	8.49%	2.98%
Public Service Enterprise Group	16.04%	12.42%	3.68%

Analyst Ratings

This is a summary of current ratings for Sempra Energy and Public Service Enterprise Group, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Sempra Energy	0	4	10	1	2.80
Public Service Enterprise Group	0	10	6	1	2.47

Sempra Energy currently has a consensus price target of $103.62, indicating a potential upside of 22.73%. Public Service Enterprise Group has a consensus price target of $89.43, indicating a potential upside of 22.04%. Given Sempra Energy’s stronger consensus rating and higher possible upside, equities analysts plainly believe Sempra Energy is more favorable than Public Service Enterprise Group.

Valuation and Earnings

This table compares Sempra Energy and Public Service Enterprise Group”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Sempra Energy	$13.70 billion	4.03	$1.84 billion	$3.45	24.47
Public Service Enterprise Group	$12.17 billion	3.00	$2.11 billion	$4.02	18.23

Public Service Enterprise Group has lower revenue, but higher earnings than Sempra Energy. Public Service Enterprise Group is trading at a lower price-to-earnings ratio than Sempra Energy, indicating that it is currently the more affordable of the two stocks.

Institutional & Insider Ownership

89.7% of Sempra Energy shares are held by institutional investors. Comparatively, 73.3% of Public Service Enterprise Group shares are held by institutional investors. 0.3% of Sempra Energy shares are held by insiders. Comparatively, 0.2% of Public Service Enterprise Group shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Dividends

Sempra Energy pays an annual dividend of $2.63 per share and has a dividend yield of 3.1%. Public Service Enterprise Group pays an annual dividend of $2.68 per share and has a dividend yield of 3.7%. Sempra Energy pays out 76.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Public Service Enterprise Group pays out 66.7% of its earnings in the form of a dividend. Sempra Energy has increased its dividend for 22 consecutive years and Public Service Enterprise Group has increased its dividend for 14 consecutive years. Public Service Enterprise Group is clearly the better dividend stock, given its higher yield and lower payout ratio.

Summary

Sempra Energy beats Public Service Enterprise Group on 11 of the 17 factors compared between the two stocks.

About Sempra Energy

Sempra operates as an energy infrastructure company in the United States and internationally. It operates through three segments: Sempra California, Sempra Texas Utilities, and Sempra Infrastructure. The Sempra California segment provides electric services; and natural gas services to San Diego County. As of December 31, 2023, it offered electric services to approximately 3.6 million population and natural gas services to approximately 3.3 million population that covers 4,100 square miles. This segment owns and operates a natural gas distribution, transmission, and storage system that supplies natural gas. As of December 31, 2023, it serves a population of 21 million covering an area of 24,000 square miles. The Sempra Texas Utilities segment engages in the regulated electricity transmission and distribution. As of December 31, 2023, its transmission system included 18,298 circuit miles of transmission lines; 1,257 transmission and distribution substations; interconnection to 173 third-party generation facilities totaling 54,277 MW; and distribution system included approximately 4.0 million points of delivery and consisted of 125,116 miles of overhead and underground lines. The Sempra Infrastructure segment develops, builds, operates, and invests in energy infrastructure to help enable the energy transition in North American markets and worldwide. The company was formerly known as Sempra Energy and changed its name to Sempra in May 2023. Sempra was incorporated in 1996 and is based in San Diego, California.

About Public Service Enterprise Group

Public Service Enterprise Group Incorporated, through its subsidiaries, operates in electric and gas utility business in the United States. It operates through PSE&G and PSEG Power segments. The PSE&G segment transmits electricity; distributes electricity and natural gas to residential, commercial, and industrial customers; and appliance services and repairs to customers through its service territory, as well as invests in solar generation projects, and energy efficiency and related programs. The PSEG Power segment engages in nuclear generation businesses; and supplies power and natural gas to nuclear power plants and gas storage facilities activities. As of December 31, 2023, it had electric transmission and distribution system of 25,000 circuit miles and 866,600 poles; 56 switching stations with an installed capacity of 39,953 megavolt-amperes (MVA), and 235 substations with an installed capacity of 10,382 MVA; 109 MVA aggregate installed capacity for substations; four electric distribution headquarters and five electric sub-headquarters; 18,000 miles of gas mains, 12 gas distribution headquarters, two sub-headquarters, and one meter shop, as well as 56 natural gas metering and regulating stations; and 158 MegaWatts defined conditions of installed PV solar capacity. Public Service Enterprise Group Incorporated was founded in 1903 and is based in Newark, New Jersey.