Critical Review: CEMIG (NYSE:CIG) & CenterPoint Energy (NYSE:CNP)

CEMIG (NYSE:CIGGet Rating) and CenterPoint Energy (NYSE:CNPGet Rating) are both utilities companies, but which is the superior business? We will contrast the two companies based on the strength of their dividends, institutional ownership, valuation, profitability, analyst recommendations, earnings and risk.

Earnings & Valuation

This table compares CEMIG and CenterPoint Energy’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
CEMIG $6.68 billion 0.78 $792.62 million $0.28 8.46
CenterPoint Energy $9.32 billion 1.92 $1.06 billion $1.26 22.49

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

Dividends

CEMIG pays an annual dividend of $0.19 per share and has a dividend yield of 8.0%. CenterPoint Energy pays an annual dividend of $0.76 per share and has a dividend yield of 2.7%. CEMIG pays out 67.9% of its earnings in the form of a dividend. CenterPoint Energy pays out 60.3% 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. CenterPoint Energy has increased its dividend for 2 consecutive years.

Profitability

This table compares CEMIG and CenterPoint Energy’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
CEMIG 11.87% 19.41% 7.66%
CenterPoint Energy 8.99% 9.97% 2.49%

Risk and Volatility

CEMIG has a beta of 0.74, meaning that its stock price is 26% less volatile than the S&P 500. Comparatively, CenterPoint Energy has a beta of 0.88, meaning that its stock price is 12% less volatile than the S&P 500.

Institutional and Insider Ownership

3.0% of CEMIG shares are owned by institutional investors. Comparatively, 90.3% of CenterPoint Energy shares are owned by institutional investors. 0.2% of CenterPoint Energy shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Analyst Ratings

This is a summary of recent ratings and recommmendations for CEMIG and CenterPoint Energy, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
CEMIG 0 1 0 0 2.00
CenterPoint Energy 0 1 6 0 2.86

CenterPoint Energy has a consensus target price of $32.75, suggesting a potential upside of 15.56%. Given CenterPoint Energy’s stronger consensus rating and higher probable upside, analysts plainly believe CenterPoint Energy is more favorable than CEMIG.

Summary

CenterPoint Energy beats CEMIG on 13 of the 17 factors compared between the two stocks.

About CEMIG

(Get Rating)

Companhia Energ├ętica de Minas Gerais, through its subsidiaries, engages in the generation, transmission, distribution, and sale of electricity in Brazil. The company generates electricity through renewable energy sources, such as water, wind, sun, and biomass; or non-renewable sources, including fossil and nuclear fuels. As of December 31, 2016, it operated hydroelectric plants, thermoelectric plants, and solar plants with a total installed capacity of approximately 8,000 megawatts in 10 states of Brazil. It is also involved in the telecommunications and energy solutions consulting businesses; exploitation of natural gas; sale and trading of electricity; and acquisition, transport, and distribution of gas and its subproducts and derivatives, as well as provision of technology systems and systems for operational management of public service concessions, including companies operating in electricity, gas, water and sewerage, and other utility companies. The company was founded in 1952 and is headquartered in Belo Horizonte, Brazil.

About CenterPoint Energy

(Get Rating)

CenterPoint Energy, Inc. is a holding company, which engages in the business of power generation and distribution. It operates through the following segments: CenterPoint Energy, Houston Electric, and CERC. The CenterPoint Energy segment consists of electric transmission and distribution services in the Texas gulf coast area in the ERCOT region and electric transmission and distribution services primarily to southwestern Indiana and includes power generation and wholesale power operations in the MISO region. The Houston Electric segment consists of electric transmission services to transmission services customers in the ERCOT region and distribution services to REPs serving the Texas gulf coast area. The CERC segment covers the Restructuring consisting of intrastate natural gas sales to, and natural gas transportation and distribution for residential, commercial, industrial and institutional customers in Indiana, Louisiana, Minnesota, Mississippi, Ohio and Texas, and permanent pipeline connections through interconnects with various interstate and intrastate pipeline companies through CEIP. The company was founded in 1866 and is headquartered in Houston, TX.

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