Comparing TXNM Energy (NYSE:TXNM) & Diversified Energy (NYSE:DEC)

TXNM Energy (NYSE:TXNM) and Diversified Energy (NYSE:DEC) are both energy companies, but which is the superior investment? We will compare the two businesses based on the strength of their analyst recommendations, earnings, profitability, risk, dividends, institutional ownership and valuation.

Volatility & Risk

TXNM Energy has a beta of 0.16, meaning that its stock price is 84% less volatile than the S&P 500. Comparatively, Diversified Energy has a beta of -0.34, meaning that its stock price is 134% less volatile than the S&P 500.

Earnings and Valuation

This table compares TXNM Energy and Diversified Energy”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
TXNM Energy	$2.17 billion	3.04	$151.89 million	$1.39	42.79
Diversified Energy	$1.83 billion	0.61	$341.11 million	$1.47	10.54

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

Insider & Institutional Ownership

91.7% of TXNM Energy shares are owned by institutional investors. Comparatively, 26.5% of Diversified Energy shares are owned by institutional investors. 1.1% of TXNM Energy shares are owned by company insiders. Comparatively, 2.9% of Diversified Energy shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Analyst Recommendations

This is a breakdown of recent ratings for TXNM Energy and Diversified Energy, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
TXNM Energy	0	3	0	0	2.00
Diversified Energy	0	2	7	0	2.78

TXNM Energy presently has a consensus target price of $61.25, indicating a potential upside of 2.98%. Diversified Energy has a consensus target price of $21.83, indicating a potential upside of 40.91%. Given Diversified Energy’s stronger consensus rating and higher possible upside, analysts plainly believe Diversified Energy is more favorable than TXNM Energy.

Dividends

TXNM Energy pays an annual dividend of $1.69 per share and has a dividend yield of 2.8%. Diversified Energy pays an annual dividend of $1.16 per share and has a dividend yield of 7.5%. TXNM Energy pays out 121.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Diversified Energy pays out 78.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Diversified Energy is clearly the better dividend stock, given its higher yield and lower payout ratio.

Profitability

This table compares TXNM Energy and Diversified Energy’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
TXNM Energy	6.96%	7.18%	2.05%
Diversified Energy	N/A	N/A	N/A

About TXNM Energy

TXNM Energy, Inc., through its subsidiaries, provides electricity and electric services in the United States. It operates through Public Service Company of New Mexico (PNM) and Texas-New Mexico Power Company (TNMP) segments. The PNM segment engages in the generation, transmission, and distribution of electricity. The segment owns and leases communications, office and other equipment, office space, vehicles, and real estate. It generates electricity using coal, natural gas and oil, and nuclear fuel and waste, as well as solar, wind, geothermal, and battery storage energy sources. The TNMP segment provides regulated transmission and distribution services. The segment also owns and leases vehicles, service facilities, and office locations throughout its service territory. The company serves residential, commercial, and industrial customers and end-users of electricity in New Mexico and Texas. The company was formerly known as PNM Resources, Inc and changed its name to TXNM Energy, Inc. in August 2024. TXNM Energy, Inc. was founded in 1882 and is based in Albuquerque, New Mexico.

About Diversified Energy

Diversified Energy Company PLC operates as an independent owner and operator of producing natural gas and oil wells primarily in the Appalachian Basin of the United States. The company is involved in the production, marketing, and transportation of natural gas, natural gas liquids, crude oil, and condensates. Its assets consist of natural gas wells and gathering systems located in the states of Tennessee, Kentucky, Virginia, West Virginia, Ohio, Pennsylvania, Oklahoma, Texas, and Louisiana. The company was formerly known as Diversified Gas & Oil PLC and changed its name to Diversified Energy Company PLC in May 2021. Diversified Energy Company PLC was founded in 2001 and is headquartered in Birmingham, Alabama.