Critical Review: E.On (OTCMKTS:EONGY) & Algonquin Power & Utilities (NYSE:AQN)

Algonquin Power & Utilities (NYSE:AQN) and E.On (OTCMKTS:EONGY) are both utilities companies, but which is the superior investment? We will contrast the two companies based on the strength of their valuation, profitability, earnings, risk, analyst recommendations, institutional ownership and dividends.

Profitability

This table compares Algonquin Power & Utilities and E.On’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Algonquin Power & Utilities	5.77%	5.16%	1.79%
E.On	4.49%	11.54%	2.72%

Earnings & Valuation

This table compares Algonquin Power & Utilities and E.On”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Algonquin Power & Utilities	$2.43 billion	1.80	$180.80 million	$0.19	29.95
E.On	$89.03 billion	0.60	$1.96 billion	$1.50	13.51

E.On has higher revenue and earnings than Algonquin Power & Utilities. E.On is trading at a lower price-to-earnings ratio than Algonquin Power & Utilities, indicating that it is currently the more affordable of the two stocks.

Volatility and Risk

Algonquin Power & Utilities has a beta of 0.7, meaning that its stock price is 30% less volatile than the S&P 500. Comparatively, E.On has a beta of 0.69, meaning that its stock price is 31% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of current ratings and price targets for Algonquin Power & Utilities and E.On, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Algonquin Power & Utilities	0	6	6	0	2.50
E.On	0	5	2	1	2.50

Algonquin Power & Utilities currently has a consensus price target of $6.72, indicating a potential upside of 18.19%. Given Algonquin Power & Utilities’ higher possible upside, equities research analysts plainly believe Algonquin Power & Utilities is more favorable than E.On.

Institutional and Insider Ownership

62.3% of Algonquin Power & Utilities shares are held by institutional investors. 0.1% of Algonquin Power & Utilities shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Dividends

Algonquin Power & Utilities pays an annual dividend of $0.26 per share and has a dividend yield of 4.6%. E.On pays an annual dividend of $0.49 per share and has a dividend yield of 2.4%. Algonquin Power & Utilities pays out 136.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. E.On pays out 32.7% of its earnings in the form of a dividend.

Summary

Algonquin Power & Utilities beats E.On on 9 of the 16 factors compared between the two stocks.

About Algonquin Power & Utilities

Algonquin Power & Utilities Corp. is an investment holding company, which engages in energy generation and water distribution facilities. It operates through the Regulated Services Group and Renewable Energy Group segments. The Regulated Services Group segment owns and operates a portfolio of electric, natural gas, water distribution, and wastewater collection utility systems and transmission. The Renewable Energy Group segment focuses on operating a diversified portfolio of renewable and thermal electric generation assets. The company was founded on August 1, 1988 and is headquartered in Oakville, Canada.

About E.On

E.ON SE operates as an energy company in Germany, the United Kingdom, Sweden, the Netherlands, rest of Europe, and internationally. It operates through two segments, Energy Networks and Customer Solutions. The Energy Networks segment operates power and gas distribution networks, as well as provides maintenance, repairs, and related services. The Customer Solutions segment supplies power, gas, and heat, as well as with products and services that enhance energy efficiency to residential, small and medium-sized enterprises, large commercial and industrial, sales partners, and public entities. Additionally, it provides SmartSim, a software solution that allows renewable gases to be fed into gas grids; gas quality tracking solutions; GasPro, a mobile gas sample collector; metering solutions; and GasCalc, a software that calculates natural gases, LNG, and biogases properties. The company was founded in 1923 and is headquartered in Essen, Germany.