American Electric Power (NASDAQ:AEP) and NiSource (NYSE:NI) Head to Head Survey

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

Analyst Recommendations

This is a breakdown of recent ratings and target prices for American Electric Power and NiSource, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
American Electric Power	0	9	12	1	2.64
NiSource	0	3	7	1	2.82

American Electric Power presently has a consensus target price of $141.24, indicating a potential upside of 9.01%. NiSource has a consensus target price of $50.33, indicating a potential upside of 6.06%. Given American Electric Power’s higher possible upside, analysts plainly believe American Electric Power is more favorable than NiSource.

Institutional & Insider Ownership

75.2% of American Electric Power shares are held by institutional investors. Comparatively, 91.6% of NiSource shares are held by institutional investors. 0.1% of American Electric Power shares are held by company insiders. Comparatively, 0.4% of NiSource shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
American Electric Power	16.29%	10.21%	2.89%
NiSource	14.15%	8.31%	2.70%

Volatility & Risk

American Electric Power has a beta of 0.56, suggesting that its stock price is 44% less volatile than the S&P 500. Comparatively, NiSource has a beta of 0.57, suggesting that its stock price is 43% less volatile than the S&P 500.

Earnings and Valuation

This table compares American Electric Power and NiSource”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
American Electric Power	$21.88 billion	3.22	$3.58 billion	$6.81	19.03
NiSource	$6.64 billion	3.43	$929.50 million	$2.01	23.61

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

Dividends

American Electric Power pays an annual dividend of $3.80 per share and has a dividend yield of 2.9%. NiSource pays an annual dividend of $1.20 per share and has a dividend yield of 2.5%. American Electric Power pays out 55.8% of its earnings in the form of a dividend. NiSource pays out 59.7% 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. American Electric Power has raised its dividend for 15 consecutive years and NiSource has raised its dividend for 14 consecutive years. American Electric Power is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

American Electric Power beats NiSource on 11 of the 17 factors compared between the two stocks.

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.

About NiSource

NiSource Inc., an energy holding company, operates as a regulated natural gas and electric utility company in the United States. It operates in two segments, Gas Distribution Operations and Electric Operations. The company distributes natural gas to approximately 3.3 million customers through approximately 55,000 miles of distribution main pipeline and the associated individual customer service lines; and 1,000 miles of transmission main pipeline in northern Indiana, Ohio, Pennsylvania, Virginia, Kentucky, and Maryland. It also generates, transmits, and distributes electricity to approximately 0.5 million customers in various counties in the northern part of Indiana, as well as engages in wholesale electric and transmission transactions. It owns and operates coal-fired electric generating stations in Wheatfield and Michigan City; combined cycle gas turbine in West Terre Haute; natural gas generating units in Wheatfield; hydro generating plants in Carroll County and White County; wind generating units in White County, Indiana; and solar generating units in Jasper County and White County. The company was formerly known as NIPSCO Industries, Inc. and changed its name to NiSource Inc. in April 1999. NiSource Inc. was founded in 1847 and is headquartered in Merrillville, Indiana.