Financial Comparison: CenterPoint Energy (NYSE:CNP) versus CEMIG (NYSE:CIG)

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

Profitability

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

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

Analyst Recommendations

This is a breakdown of current ratings and price targets for CenterPoint Energy and CEMIG, as reported by MarketBeat.com.

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

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

Dividends

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

Valuation & Earnings

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

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

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.

Risk and Volatility

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

Insider and Institutional Ownership

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

Summary

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

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.

About CEMIG

(Get Rating)

Companhia Energética 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.