FirstEnergy (NYSE:FE) versus CenterPoint Energy (NYSE:CNP) Head-To-Head Survey

FirstEnergy (NYSE:FE) and CenterPoint Energy (NYSE:CNP) are both large-cap utilities companies, but which is the better business? We will contrast the two companies based on the strength of their dividends, valuation, analyst recommendations, institutional ownership, risk, profitability and earnings.

Institutional & Insider Ownership

94.2% of FirstEnergy shares are held by institutional investors. Comparatively, 80.3% of CenterPoint Energy shares are held by institutional investors. 0.3% of FirstEnergy shares are held by insiders. Comparatively, 0.2% of CenterPoint Energy shares are held 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

FirstEnergy has a beta of 0.21, indicating that its stock price is 79% less volatile than the S&P 500. Comparatively, CenterPoint Energy has a beta of 0.48, indicating that its stock price is 52% less volatile than the S&P 500.

Profitability

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

Net Margins Return on Equity Return on Assets
FirstEnergy 2.79% 20.29% 3.49%
CenterPoint Energy 5.55% 13.59% 2.78%

Dividends

FirstEnergy pays an annual dividend of $1.52 per share and has a dividend yield of 3.2%. CenterPoint Energy pays an annual dividend of $1.15 per share and has a dividend yield of 3.9%. FirstEnergy pays out 58.7% of its earnings in the form of a dividend. CenterPoint Energy pays out 71.9% 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.

Valuation and Earnings

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

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
FirstEnergy $11.26 billion 2.27 $1.35 billion $2.59 18.25
CenterPoint Energy $10.59 billion 1.38 $368.00 million $1.60 18.21

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

Analyst Ratings

This is a summary of current ratings for FirstEnergy and CenterPoint Energy, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
FirstEnergy 0 3 3 0 2.50
CenterPoint Energy 0 2 12 0 2.86

FirstEnergy currently has a consensus price target of $48.25, indicating a potential upside of 2.07%. CenterPoint Energy has a consensus price target of $31.94, indicating a potential upside of 9.62%. Given CenterPoint Energy’s stronger consensus rating and higher possible upside, analysts plainly believe CenterPoint Energy is more favorable than FirstEnergy.

Summary

FirstEnergy beats CenterPoint Energy on 10 of the 16 factors compared between the two stocks.

FirstEnergy Company Profile

FirstEnergy Corp., through its subsidiaries, generates, transmits, and distributes electricity in the United States. The company operates through Regulated Distribution and Regulated Transmission segments. It owns and operates coal-fired, nuclear, hydroelectric, natural gas, wind, and solar power generating facilities. The company also provides energy-related products and services to retail and wholesale customers. It operates 24,506 circuit miles of overhead and underground transmission lines; and electric distribution systems, including 277,284 miles of overhead pole line and underground conduit carrying primary, secondary, and street lighting circuits, as well as owns substations with a total installed transformer capacity of approximately 164,611,989 kilovolt-amperes. The company serves approximately six million customers in Ohio, Pennsylvania, West Virginia, Maryland, New Jersey, and New York. FirstEnergy Corp. was founded in 1996 and is headquartered in Akron, Ohio.

CenterPoint Energy Company Profile

CenterPoint Energy, Inc. operates as a public utility holding company in the United States. The company's Electric Transmission & Distribution segment offers electric transmission and distribution services to retail electric providers, municipalities, electric cooperatives, and other distribution companies. As of December 31, 2018, it owned 235 substation sites with a total installed rated transformer capacity of 68,338 megavolt amperes; and 15 regional service centers located on a total of 332 acres of land. Its Natural Gas Distribution segment sells regulated intrastate natural gas; provides natural gas transportation and storage services for residential, commercial, industrial, and transportation customers; and offers unregulated services comprising residential appliance repair and maintenance services. As of December 31, 2018, this segment owned approximately 76,000 linear miles of natural gas distribution mains. The company's Energy Services segment provides physical natural gas supplies primarily to commercial and industrial customers, and electric and natural gas utilities; natural gas management services; and physical delivery services, as well as procures and optimizes transportation and storage assets. As of December 31, 20118, it owned and operated 200 miles of intrastate pipeline in Louisiana and Texas; and leases transportation capacity on various interstate and intrastate pipelines, and storage. Its Midstream Investment segment offers natural gas and crude oil gathering, and natural gas processing services to its producer customers; and interstate and intrastate natural gas pipeline transportation and storage services to its producer, power plant, local distribution company, and industrial end-user customers. The company was founded in 1882 and is headquartered in Houston, Texas.

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