Financial Comparison: Avangrid (NYSE:AGR) & American Electric Power (NASDAQ:AEP)

Avangrid (NYSE:AGRGet Rating) and American Electric Power (NASDAQ:AEPGet Rating) are both large-cap utilities companies, but which is the superior investment? We will compare the two companies based on the strength of their analyst recommendations, dividends, valuation, earnings, profitability, risk and institutional ownership.

Volatility & Risk

Avangrid has a beta of 0.34, indicating that its stock price is 66% less volatile than the S&P 500. Comparatively, American Electric Power has a beta of 0.34, indicating that its stock price is 66% less volatile than the S&P 500.

Dividends

Avangrid pays an annual dividend of $1.76 per share and has a dividend yield of 4.0%. American Electric Power pays an annual dividend of $3.12 per share and has a dividend yield of 3.5%. Avangrid pays out 82.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. American Electric Power pays out 59.7% of its earnings in the form of a dividend. American Electric Power has increased its dividend for 13 consecutive years.

Earnings & Valuation

This table compares Avangrid and American Electric Power’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Avangrid $6.97 billion 2.42 $707.00 million $2.14 20.43
American Electric Power $16.80 billion 2.70 $2.49 billion $5.23 16.90

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

Institutional & Insider Ownership

11.4% of Avangrid shares are owned by institutional investors. Comparatively, 73.3% of American Electric Power shares are owned by institutional investors. 0.1% of Avangrid shares are owned by company insiders. Comparatively, 0.1% of American Electric Power shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Analyst Ratings

This is a summary of recent recommendations for Avangrid and American Electric Power, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Avangrid 1 2 1 0 2.00
American Electric Power 0 1 6 0 2.86

Avangrid presently has a consensus target price of $49.00, suggesting a potential upside of 12.10%. American Electric Power has a consensus target price of $103.98, suggesting a potential upside of 17.61%. Given American Electric Power’s stronger consensus rating and higher probable upside, analysts plainly believe American Electric Power is more favorable than Avangrid.

Profitability

This table compares Avangrid and American Electric Power’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Avangrid 11.45% 4.40% 2.24%
American Electric Power 15.34% 10.65% 2.78%

Summary

American Electric Power beats Avangrid on 14 of the 16 factors compared between the two stocks.

Avangrid Company Profile (Get Rating)

Avangrid, Inc., an energy services holding company, engages in the regulated energy transmission and distribution, and renewable energy generation businesses in the United States. The company operates through Networks and Renewables segments. It is involved in the generation, transmission, and distribution of electricity; and distribution, transportation, and sale of natural gas. The company also operates renewable energy generation facilities primarily using onshore wind power, as well as solar, biomass, and thermal power. It delivers natural gas and electricity to residential, commercial, and institutional customers through its regulated utilities in New York, Maine, Connecticut, and Massachusetts; and sells its output to investor-owned utilities, public utilities, and other credit-worthy entities. In addition, the company generates and provides power and other services to federal and state agencies, as well as institutional retail and joint action agencies; and delivers thermal output to wholesale customers in the Western United States. It owns eight electric and natural gas utilities, serving 3.3 million customers in New York and New England, as well as owns and operates 8.8 gigawatts of electricity capacity primarily through wind power in 22 states. The company was incorporated in 1997 and is headquartered in Orange, Connecticut. Avangrid, Inc. is a subsidiary of Iberdrola, S.A.

American Electric Power Company Profile (Get Rating)

American Electric Power Company, Inc., an electric public utility holding company, engages in the generation, transmission, and distribution of electricity for sale to retail and wholesale customers in the United States. It operates through Vertically Integrated Utilities, Transmission and Distribution Utilities, AEP Transmission Holdco, and Generation & Marketing segments. The company generates electricity using coal and lignite, natural gas, nuclear, hydro, solar, wind, and other energy sources. It also supplies and markets electric power at wholesale to other electric utility companies, rural electric cooperatives, municipalities, and other market participants. American Electric Power Company, Inc. was incorporated in 1906 and is headquartered in Columbus, Ohio.

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