Reviewing Westar Energy (WR) and SCANA (SCG)

Westar Energy (NYSE: WR) and SCANA (NYSE:SCG) are both mid-cap utilities companies, but which is the better investment? We will compare the two companies based on the strength of their institutional ownership, valuation, risk, dividends, analyst recommendations, earnings and profitability.

Profitability

This table compares Westar Energy and SCANA’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Westar Energy 13.32% 8.94% 2.98%
SCANA 10.45% 10.05% 3.05%

Dividends

Westar Energy pays an annual dividend of $1.60 per share and has a dividend yield of 3.2%. SCANA pays an annual dividend of $2.45 per share and has a dividend yield of 5.6%. Westar Energy pays out 66.4% of its earnings in the form of a dividend. SCANA pays out 77.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Westar Energy has increased its dividend for 18 consecutive years and SCANA has increased its dividend for 12 consecutive years.

Insider & Institutional Ownership

73.6% of Westar Energy shares are owned by institutional investors. Comparatively, 66.5% of SCANA shares are owned by institutional investors. 0.7% of Westar Energy shares are owned by insiders. Comparatively, 0.4% of SCANA shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Volatility and Risk

Westar Energy has a beta of 0.42, suggesting that its stock price is 58% less volatile than the S&P 500. Comparatively, SCANA has a beta of 0.2, suggesting that its stock price is 80% less volatile than the S&P 500.

Earnings & Valuation

This table compares Westar Energy and SCANA’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Westar Energy $2.56 billion 2.79 $346.57 million $2.41 20.87
SCANA $4.23 billion 1.49 $595.00 million $3.16 13.94

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

Analyst Recommendations

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

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Westar Energy 0 0 5 0 3.00
SCANA 2 7 2 0 2.00

Westar Energy currently has a consensus price target of $55.75, suggesting a potential upside of 10.86%. SCANA has a consensus price target of $56.69, suggesting a potential upside of 28.69%. Given SCANA’s higher possible upside, analysts plainly believe SCANA is more favorable than Westar Energy.

Summary

Westar Energy beats SCANA on 10 of the 17 factors compared between the two stocks.

About Westar Energy

Westar Energy, Inc. is an electric utility. The Company provides electric generation, transmission and distribution services. The Company provides these services in central and northeastern Kansas, including the cities of Topeka, Lawrence, Manhattan, Salina and Hutchinson. Its subsidiary, Kansas Gas and Electric Company (KGE), provides these services in south-central and southeastern Kansas, including the city of Wichita. Both the Company and KGE conduct business using the name Westar Energy. The Company supplies electric energy at retail to customers in Kansas. The Company also supplies electric energy at wholesale to municipalities and electric cooperatives in Kansas, and has contracts for the sale or purchase of wholesale electricity with other utilities. As of December 31, 2016, it had 6,292 megawatts (MW) of generating capacity in service.

About SCANA

SCANA Corporation is a holding company. The Company, through its subsidiaries, is engaged in the generation, transmission, distribution and sale of electricity in South Carolina. The Company operates through segments, including Electric Operations, Gas Distribution, Gas Marketing and All Other. The Company is engaged in the purchase, transmission and sale of natural gas in North Carolina and South Carolina. The Electric Operations segment generates, transmits and distributes electricity. The Company’s regulated businesses include subsidiaries, such as South Carolina Electric & Gas Company (SCE&G), South Carolina Fuel Company, Inc. (Fuel Company), South Carolina Generating Company, Inc. (GENCO) and Public Service Company of North Carolina, Incorporated (PSNC Energy). The Company’s nonregulated businesses include subsidiaries, such as SCANA Energy Marketing, Inc. (SCANA Energy), ServiceCare, Inc., SCANA Services, Inc. and SCANA Corporate Security Services, Inc.

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