Financial Review: Consolidated Edison (NYSE:ED) versus CenterPoint Energy (NYSE:CNP)

Consolidated Edison (NYSE:ED) and CenterPoint Energy (NYSE:CNP) are both large-cap utilities companies, but which is the better business? We will contrast the two businesses based on the strength of their institutional ownership, dividends, analyst recommendations, profitability, earnings, valuation and risk.

Valuation and Earnings

This table compares Consolidated Edison and CenterPoint Energy”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Consolidated Edison	$16.92 billion	2.33	$2.02 billion	$6.09	17.49
CenterPoint Energy	$9.36 billion	2.73	$1.05 billion	$1.70	22.83

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Consolidated Edison	12.53%	8.44%	2.83%
CenterPoint Energy	11.61%	11.10%	2.68%

Dividends

Consolidated Edison pays an annual dividend of $3.55 per share and has a dividend yield of 3.3%. CenterPoint Energy pays an annual dividend of $0.96 per share and has a dividend yield of 2.5%. Consolidated Edison pays out 58.3% of its earnings in the form of a dividend. CenterPoint Energy pays out 56.5% 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. Consolidated Edison has increased its dividend for 52 consecutive years and CenterPoint Energy has increased its dividend for 5 consecutive years. Consolidated Edison is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Recommendations

This is a summary of current ratings for Consolidated Edison and CenterPoint Energy, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Consolidated Edison	6	6	3	0	1.80
CenterPoint Energy	0	8	9	0	2.53

Consolidated Edison presently has a consensus target price of $108.93, suggesting a potential upside of 2.27%. CenterPoint Energy has a consensus target price of $45.36, suggesting a potential upside of 16.87%. Given CenterPoint Energy’s stronger consensus rating and higher possible upside, analysts clearly believe CenterPoint Energy is more favorable than Consolidated Edison.

Volatility and Risk

Consolidated Edison has a beta of 0.27, suggesting that its share price is 73% less volatile than the S&P 500. Comparatively, CenterPoint Energy has a beta of 0.46, suggesting that its share price is 54% less volatile than the S&P 500.

Insider and Institutional Ownership

66.3% of Consolidated Edison shares are owned by institutional investors. Comparatively, 91.8% of CenterPoint Energy shares are owned by institutional investors. 0.2% of Consolidated Edison shares are owned by insiders. Comparatively, 0.2% of CenterPoint Energy shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Summary

CenterPoint Energy beats Consolidated Edison on 10 of the 17 factors compared between the two stocks.

About Consolidated Edison

Consolidated Edison, Inc., through its subsidiaries, engages in the regulated electric, gas, and steam delivery businesses in the United States. It offers electric services to approximately 3.7 million customers in New York City and Westchester County; gas to approximately 1.1 million customers in Manhattan, the Bronx, parts of Queens, and Westchester County; and steam to approximately 1,530 customers in parts of Manhattan. The company also supplies electricity to approximately 0.3 million customers in southeastern New York and northern New Jersey; and gas to approximately 0.2 million customers in southeastern New York. In addition, it operates 545 circuit miles of transmission lines; 15 transmission substations; 63 distribution substations; 90,051 in-service line transformers; 3,788 pole miles of overhead distribution lines; and 2,314 miles of underground distribution lines, as well as 4,363 miles of mains and 380,870 service lines for natural gas distribution. Further, the company invests in electric and gas transmission projects. It primarily sells electricity to industrial, commercial, residential, and government customers. Consolidated Edison, Inc. was founded in 1823 and is based in New York, New York.

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.