E.On (OTCMKTS:EONGY) and CenterPoint Energy (NYSE:CNP) Critical Review

CenterPoint Energy (NYSE:CNP) and E.On (OTCMKTS:EONGY) are both large-cap utilities companies, but which is the superior stock? We will contrast the two businesses based on the strength of their analyst recommendations, institutional ownership, earnings, risk, profitability, valuation and dividends.

Profitability

This table compares CenterPoint Energy and E.On’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
CenterPoint Energy	11.38%	10.56%	2.57%
E.On	2.20%	12.06%	2.72%

Dividends

CenterPoint Energy pays an annual dividend of $0.92 per share and has a dividend yield of 2.2%. E.On pays an annual dividend of $0.49 per share and has a dividend yield of 2.3%. CenterPoint Energy pays out 56.4% of its earnings in the form of a dividend. E.On pays out 66.2% 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. CenterPoint Energy has increased its dividend for 5 consecutive years.

Valuation and Earnings

This table compares CenterPoint Energy and E.On”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
CenterPoint Energy	$9.36 billion	2.92	$1.05 billion	$1.63	25.59
E.On	$89.03 billion	0.62	$1.96 billion	$0.74	28.58

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

Volatility & Risk

CenterPoint Energy has a beta of 0.48, indicating that its stock price is 52% less volatile than the S&P 500. Comparatively, E.On has a beta of 0.74, indicating that its stock price is 26% less volatile than the S&P 500.

Insider & Institutional Ownership

91.8% of CenterPoint Energy shares are owned by institutional investors. 0.2% of CenterPoint Energy shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Analyst Ratings

This is a summary of recent recommendations and price targets for CenterPoint Energy and E.On, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
CenterPoint Energy	1	6	7	1	2.53
E.On	1	6	2	0	2.11

CenterPoint Energy presently has a consensus target price of $44.38, suggesting a potential upside of 6.42%. Given CenterPoint Energy’s stronger consensus rating and higher possible upside, equities research analysts plainly believe CenterPoint Energy is more favorable than E.On.

Summary

CenterPoint Energy beats E.On on 11 of the 18 factors compared between the two stocks.

About CenterPoint Energy

CenterPoint Energy, Inc. operates as a public utility holding company in the United States. The company operates through two segments, Electric and Natural Gas. The Electric segment includes electric transmission and distribution services to electric customers and electric generation assets, as well as optimizes assets in the wholesale power market. The Natural Gas segment engages in the intrastate natural gas sales, and natural gas transportation and distribution for residential, commercial, industrial and institutional customers in Indiana, Louisiana, Minnesota, Mississippi, Ohio, and Texas; permanent pipeline connections through interconnects with various interstate and intrastate pipeline companies; and provides maintenance and repair services of home appliances to customers in Minnesota and home repair protection plans to natural gas customers in Indiana, Mississippi, Ohio, and Texas through a third party. It serves approximately 2,534,730 metered customers; owned 348 substations with transformer capacity of 79,719 megavolt amperes; and owned and operated 217 miles of intrastate pipeline in Louisiana and Texas. The company was founded in 1866 and is headquartered in Houston, Texas.

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.