Hydro One (OTCMKTS:HRNNF) and Evergy (NASDAQ:EVRG) Financial Analysis

Evergy (NASDAQ:EVRG) and Hydro One (OTCMKTS:HRNNF) are both large-cap utilities companies, but which is the better stock? We will contrast the two businesses based on the strength of their profitability, analyst recommendations, institutional ownership, earnings, risk, dividends and valuation.

Earnings and Valuation

This table compares Evergy and Hydro One”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Evergy	$5.96 billion	3.11	$855.60 million	$3.94	20.38
Hydro One	$6.47 billion	3.30	$958.32 million	$1.71	20.83

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

Insider and Institutional Ownership

87.2% of Evergy shares are owned by institutional investors. 1.5% of Evergy shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Dividends

Evergy pays an annual dividend of $2.78 per share and has a dividend yield of 3.5%. Hydro One pays an annual dividend of $1.02 per share and has a dividend yield of 2.9%. Evergy pays out 70.6% of its earnings in the form of a dividend. Hydro One pays out 59.6% 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. Evergy has increased its dividend for 20 consecutive years. Evergy is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Recommendations

This is a breakdown of recent ratings and target prices for Evergy and Hydro One, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Evergy	0	3	8	0	2.73
Hydro One	1	5	1	0	2.00

Evergy currently has a consensus target price of $90.60, indicating a potential upside of 12.83%. Given Evergy’s stronger consensus rating and higher probable upside, analysts clearly believe Evergy is more favorable than Hydro One.

Profitability

This table compares Evergy and Hydro One’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Evergy	15.19%	9.20%	2.76%
Hydro One	14.88%	11.02%	3.56%

Summary

Evergy beats Hydro One on 9 of the 16 factors compared between the two stocks.

About Evergy

Evergy, Inc., together with its subsidiaries, engages in the generation, transmission, distribution, and sale of electricity in the United States. The company generates electricity through coal, landfill gas, uranium, and natural gas and oil sources, as well as solar, wind, other renewable sources. It serves residences, commercial firms, industrials, municipalities, and other electric utilities. The company was incorporated in 2017 and is headquartered in Kansas City, Missouri.

About Hydro One

Hydro One Limited, through its subsidiaries, operates as an electricity transmission and distribution company in Ontario. The company operates through three segments: Transmission, Distribution, and Other. It owns and operates approximately 30,000 circuit kilometers of high-voltage transmission lines and approximately 125,000 circuit kilometers primary low-voltage distribution lines. The company serves residential, small business, commercial, and industrial customers, as well as municipal utilities. It also provides telecommunications support services for its transmission and distribution businesses; and information and communications technology services and solutions. The company was incorporated in 2015 and is headquartered in Toronto, Canada.