Ameren (NYSE:AEE) vs. American Electric Power (NASDAQ:AEP) Head-To-Head Comparison

Ameren (NYSE:AEE) and American Electric Power (NASDAQ:AEP) are both large-cap utilities companies, but which is the superior business? We will compare the two businesses based on the strength of their institutional ownership, profitability, dividends, valuation, analyst recommendations, risk and earnings.

Earnings & Valuation

This table compares Ameren and American Electric Power”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Ameren	$8.80 billion	3.55	$1.46 billion	$5.68	19.84
American Electric Power	$21.88 billion	3.15	$3.58 billion	$6.19	20.44

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

Profitability

This table compares Ameren and American Electric Power’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Ameren	17.86%	10.95%	3.00%
American Electric Power	14.21%	10.52%	2.91%

Dividends

Ameren pays an annual dividend of $3.00 per share and has a dividend yield of 2.7%. American Electric Power pays an annual dividend of $3.80 per share and has a dividend yield of 3.0%. Ameren pays out 52.8% of its earnings in the form of a dividend. American Electric Power pays out 61.4% 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. Ameren has increased its dividend for 12 consecutive years and American Electric Power has increased its dividend for 15 consecutive years. American Electric Power is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Recommendations

This is a summary of recent recommendations and price targets for Ameren and American Electric Power, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Ameren	0	7	13	0	2.65
American Electric Power	0	8	16	0	2.67

Ameren presently has a consensus price target of $117.43, suggesting a potential upside of 4.21%. American Electric Power has a consensus price target of $139.83, suggesting a potential upside of 10.51%. Given American Electric Power’s stronger consensus rating and higher probable upside, analysts clearly believe American Electric Power is more favorable than Ameren.

Risk and Volatility

Ameren has a beta of 0.42, suggesting that its share price is 58% less volatile than the S&P 500. Comparatively, American Electric Power has a beta of 0.46, suggesting that its share price is 54% less volatile than the S&P 500.

Insider & Institutional Ownership

79.1% of Ameren shares are held by institutional investors. Comparatively, 75.2% of American Electric Power shares are held by institutional investors. 0.3% of Ameren shares are held by insiders. Comparatively, 0.1% of American Electric Power shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Summary

American Electric Power beats Ameren on 10 of the 17 factors compared between the two stocks.

About Ameren

Ameren Corporation, together with its subsidiaries, operates as a public utility holding company in the United States. The company operates through four segments: Ameren Missouri, Ameren Illinois Electric Distribution, Ameren Illinois Natural Gas, and Ameren Transmission. It engages in the rate-regulated electric generation, transmission, and distribution activities; and rate-regulated natural gas distribution business. In addition, the company generates electricity through coal, nuclear, and natural gas, as well as renewable sources, such as hydroelectric, wind, methane gas, and solar. It serves residential, commercial, and industrial customers. The company was founded in 1881 and is headquartered in Saint Louis, Missouri.

About American Electric Power

American Electric Power Company, Inc., an electric public utility holding company, engages in the generation, transmission, and distribution of electricity for sale to retail and wholesale customers in the United States. It operates through Vertically Integrated Utilities, Transmission and Distribution Utilities, AEP Transmission Holdco, and Generation & Marketing segments. The company generates electricity using coal and lignite, natural gas, renewable, nuclear, hydro, solar, wind, and other energy sources. It also supplies and markets electric power at wholesale to other electric utility companies, rural electric cooperatives, municipalities, and other market participants. American Electric Power Company, Inc. was incorporated in 1906 and is headquartered in Columbus, Ohio.