Reviewing PPL (NYSE:PPL) & RWE (OTCMKTS:RWEOY)

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

Insider & Institutional Ownership

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

Analyst Ratings

This is a summary of recent ratings and price targets for RWE and PPL, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
RWE	0	5	3	0	2.38
PPL	0	4	11	1	2.81

PPL has a consensus target price of $40.06, suggesting a potential upside of 12.18%. Given PPL’s stronger consensus rating and higher possible upside, analysts clearly believe PPL is more favorable than RWE.

Dividends

RWE pays an annual dividend of $1.00 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%. RWE pays out 19.0% 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. PPL has raised its dividend for 3 consecutive years. PPL is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Earnings and Valuation

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
RWE	$19.94 billion	2.35	$3.54 billion	$5.26	12.27
PPL	$9.04 billion	2.97	$1.18 billion	$1.69	21.13

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

Risk and Volatility

RWE has a beta of 0.57, suggesting that its share price is 43% less volatile than the S&P 500. Comparatively, PPL has a beta of 0.55, suggesting that its share price is 45% less volatile than the S&P 500.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
RWE	21.25%	5.34%	2.10%
PPL	13.47%	9.33%	3.05%

Summary

PPL beats RWE on 12 of the 18 factors compared between the two stocks.

About RWE

RWE Aktiengesellschaft generates and supplies electricity from renewable and conventional sources in Germany, the United Kingdom, rest of Europe, North America, and internationally. It operates through five segments: Offshore Wind; Onshore Wind/Solar; Hydro/Biomass/Gas; Supply & Trading; and Coal/Nuclear. The company generates wind, hydro, solar, nuclear, gas, and biomass electricity. It also trades in electricity, gas, and energy commodities; operates gas storage facilities; and engages in battery storage activities. The company serves commercial, industrial, and corporate customers. RWE Aktiengesellschaft was founded in 1898 and is headquartered in Essen, Germany.

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.