Financial Contrast: AES (NYSE:AES) and Kenon (NYSE:KEN)

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

Analyst Ratings

This is a breakdown of current recommendations for AES and Kenon, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
AES	0	8	2	0	2.20
Kenon	0	1	0	0	2.00

AES currently has a consensus target price of $24.09, suggesting a potential upside of 66.32%. Given AES’s stronger consensus rating and higher possible upside, research analysts plainly believe AES is more favorable than Kenon.

Dividends

AES pays an annual dividend of $0.70 per share and has a dividend yield of 4.8%. Kenon pays an annual dividend of $3.85 per share and has a dividend yield of 4.7%. AES pays out 55.6% of its earnings in the form of a dividend. Kenon pays out 500.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. AES has raised its dividend for 12 consecutive years and Kenon has raised its dividend for 2 consecutive years. AES is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

This table compares AES and Kenon’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
AES	7.40%	19.93%	3.29%
Kenon	7.60%	3.17%	1.94%

Earnings and Valuation

This table compares AES and Kenon”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
AES	$12.23 billion	0.84	$910.00 million	$1.26	11.50
Kenon	$871.63 million	4.87	$66.27 million	$0.77	105.83

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

Institutional & Insider Ownership

93.1% of AES shares are owned by institutional investors. Comparatively, 13.4% of Kenon shares are owned by institutional investors. 0.8% of AES shares are owned by insiders. Comparatively, 0.1% of Kenon shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Volatility & Risk

AES has a beta of 1.03, indicating that its share price is 3% more volatile than the S&P 500. Comparatively, Kenon has a beta of 1.08, indicating that its share price is 8% more volatile than the S&P 500.

Summary

AES beats Kenon on 13 of the 17 factors compared between the two stocks.

About AES

The AES Corporation, together with its subsidiaries, operates as a diversified power generation and utility company in the United States and internationally. The company owns and/or operates power plants to generate and sell power to customers, such as utilities, industrial users, and other intermediaries; owns and/or operates utilities to generate or purchase, distribute, transmit, and sell electricity to end-user customers in the residential, commercial, industrial, and governmental sectors; and generates and sells electricity on the wholesale market. It uses various fuels and technologies to generate electricity, such as coal, gas, hydro, wind, solar, and biomass, as well as renewables comprising energy storage and landfill gas. The company owns and/or operates a generation portfolio of approximately 34,596 megawatts and distributes power to 2.6 million customers. The company was formerly known as Applied Energy Services, Inc. and changed its name to The AES Corporation in April 2000. The AES Corporation was incorporated in 1981 and is headquartered in Arlington, Virginia.

About Kenon

Kenon Holdings Ltd., through its subsidiaries, operates as an owner, developer, and operator of power generation facilities in Israel, the United States, and internationally. It operates through OPC Power Plants, CPV Group, and ZIM segments. The company engages in the generation and supply of electricity and energy; development, construction, and management of solar and wind energy, and conventional natural gas-fired power plants; and provision of container liner shipping services. It also operates a fleet of 150 vessels. Kenon Holdings Ltd. was incorporated in 2014 and is based in Singapore. Kenon Holdings Ltd. operates as a subsidiary of Ansonia Holdings Singapore B.V.