Financial Analysis: PPL (NYSE:PPL) vs. Unitil (NYSE:UTL)

PPL (NYSE:PPL) and Unitil (NYSE:UTL) are both utilities companies, but which is the better investment? We will compare the two businesses based on the strength of their institutional ownership, dividends, valuation, risk, profitability, earnings and analyst recommendations.

Profitability

This table compares PPL and Unitil’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
PPL	13.06%	9.29%	3.10%
Unitil	9.60%	9.89%	2.89%

Dividends

PPL pays an annual dividend of $1.14 per share and has a dividend yield of 3.2%. Unitil pays an annual dividend of $1.90 per share and has a dividend yield of 3.7%. PPL pays out 71.3% of its earnings in the form of a dividend. Unitil pays out 60.1% 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. PPL has increased its dividend for 3 consecutive years and Unitil has increased its dividend for 12 consecutive years. Unitil is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Institutional and Insider Ownership

77.0% of PPL shares are held by institutional investors. Comparatively, 76.8% of Unitil shares are held by institutional investors. 0.3% of PPL shares are held by insiders. Comparatively, 2.2% of Unitil shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Analyst Recommendations

This is a breakdown of current ratings for PPL and Unitil, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
PPL	0	3	9	1	2.85
Unitil	0	4	0	0	2.00

PPL currently has a consensus target price of $42.00, indicating a potential upside of 17.14%. Unitil has a consensus target price of $57.00, indicating a potential upside of 12.27%. Given PPL’s stronger consensus rating and higher probable upside, analysts plainly believe PPL is more favorable than Unitil.

Volatility & Risk

PPL has a beta of 0.6, suggesting that its share price is 40% less volatile than the S&P 500. Comparatively, Unitil has a beta of 0.33, suggesting that its share price is 67% less volatile than the S&P 500.

Valuation and Earnings

This table compares PPL and Unitil”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
PPL	$9.04 billion	2.98	$1.18 billion	$1.60	22.41
Unitil	$582.10 million	1.57	$50.20 million	$3.16	16.07

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

Summary

PPL beats Unitil on 12 of the 18 factors compared between the two stocks.

About PPL

PPL Corporation, an energy company, focuses on providing electricity and natural gas to approximately 3.6 million customers in the United States. It operates through three segments: Kentucky Regulated, Pennsylvania Regulated, and Rhode Island Regulated. The company delivers electricity to customers in Pennsylvania, Kentucky, Virginia, and Rhode Island; delivers natural gas to customers in Kentucky and Rhode Island; and generates electricity from power plants in Kentucky. PPL Corporation was founded in 1920 and is headquartered in Allentown, Pennsylvania.

About Unitil

Unitil Corporation, a public utility holding company, engages in the distribution of electricity and natural gas. It operates through two segments, Utility Electric Operations, Utility Gas Operations. The company distributes electricity in the southeastern seacoast and state capital regions of New Hampshire, and the greater Fitchburg area of north central Massachusetts; and distributes natural gas in southeastern New Hampshire and portions of southern and central Maine, including the city of Portland and the Lewiston-Auburn area, as well as electricity and natural gas in the greater Fitchburg area of north central Massachusetts. It also operates 86 miles of interstate underground natural gas transmission pipeline that provides interstate natural gas pipeline access and transportation services primarily in Maine and New Hampshire. In addition, the company provides real estate management services. It serves approximately 108,100 electric customers and 87,500 natural gas customers. Unitil Corporation was incorporated in 1984 and is headquartered in Hampton, New Hampshire.