Head to Head Review: TXNM Energy (NYSE:TXNM) and Ameren (NYSE:AEE)

Ameren (NYSE:AEE) and TXNM Energy (NYSE:TXNM) are both utilities companies, but which is the better investment? We will compare the two companies based on the strength of their earnings, profitability, analyst recommendations, valuation, institutional ownership, risk and dividends.

Analyst Recommendations

This is a breakdown of recent ratings and recommmendations for Ameren and TXNM Energy, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Ameren	0	4	10	0	2.71
TXNM Energy	0	3	0	0	2.00

Ameren currently has a consensus target price of $118.08, indicating a potential upside of 18.20%. TXNM Energy has a consensus target price of $61.25, indicating a potential upside of 4.80%. Given Ameren’s stronger consensus rating and higher probable upside, analysts plainly believe Ameren is more favorable than TXNM Energy.

Insider and Institutional Ownership

79.1% of Ameren shares are owned by institutional investors. Comparatively, 91.7% of TXNM Energy shares are owned by institutional investors. 0.3% of Ameren shares are owned by insiders. Comparatively, 1.1% of TXNM Energy shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Profitability

This table compares Ameren and TXNM Energy’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Ameren	17.86%	10.95%	3.00%
TXNM Energy	9.04%	8.11%	2.34%

Volatility and Risk

Ameren has a beta of 0.44, indicating that its stock price is 56% less volatile than the S&P 500. Comparatively, TXNM Energy has a beta of 0.17, indicating that its stock price is 83% less volatile than the S&P 500.

Earnings & Valuation

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Ameren	$8.80 billion	3.14	$1.46 billion	$5.68	17.59
TXNM Energy	$2.17 billion	2.97	$151.89 million	$1.81	32.29

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

Dividends

Ameren pays an annual dividend of $3.00 per share and has a dividend yield of 3.0%. TXNM Energy pays an annual dividend of $1.69 per share and has a dividend yield of 2.9%. Ameren pays out 52.8% of its earnings in the form of a dividend. TXNM Energy pays out 93.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Ameren has increased its dividend for 12 consecutive years. Ameren is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

Ameren beats TXNM Energy on 14 of the 17 factors compared between the two stocks.

About Ameren

Ameren Corporation, together with its subsidiaries, operates as a public utility holding company in the United States. The company operates through four segments: Ameren Missouri, Ameren Illinois Electric Distribution, Ameren Illinois Natural Gas, and Ameren Transmission. It engages in the rate-regulated electric generation, transmission, and distribution activities; and rate-regulated natural gas distribution business. In addition, the company generates electricity through coal, nuclear, and natural gas, as well as renewable sources, such as hydroelectric, wind, methane gas, and solar. It serves residential, commercial, and industrial customers. The company was founded in 1881 and is headquartered in Saint Louis, Missouri.

About TXNM Energy

TXNM Energy, Inc., through its subsidiaries, provides electricity and electric services in the United States. It operates through Public Service Company of New Mexico (PNM) and Texas-New Mexico Power Company (TNMP) segments. The PNM segment engages in the generation, transmission, and distribution of electricity. The segment owns and leases communications, office and other equipment, office space, vehicles, and real estate. It generates electricity using coal, natural gas and oil, and nuclear fuel and waste, as well as solar, wind, geothermal, and battery storage energy sources. The TNMP segment provides regulated transmission and distribution services. The segment also owns and leases vehicles, service facilities, and office locations throughout its service territory. The company serves residential, commercial, and industrial customers and end-users of electricity in New Mexico and Texas. The company was formerly known as PNM Resources, Inc and changed its name to TXNM Energy, Inc. in August 2024. TXNM Energy, Inc. was founded in 1882 and is based in Albuquerque, New Mexico.