Head to Head Comparison: E.On (OTCMKTS:EONGY) vs. American Electric Power (NASDAQ:AEP)

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

Volatility and Risk

E.On has a beta of 0.74, suggesting that its stock price is 26% less volatile than the S&P 500. Comparatively, American Electric Power has a beta of 0.56, suggesting that its stock price is 44% less volatile than the S&P 500.

Insider and Institutional Ownership

75.2% of American Electric Power shares are owned by institutional investors. 0.1% of American Electric Power shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
E.On	4.58%	12.71%	2.87%
American Electric Power	16.29%	10.21%	2.89%

Valuation and Earnings

This table compares E.On and American Electric Power”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
E.On	$89.03 billion	0.62	$1.96 billion	$1.53	13.85
American Electric Power	$21.88 billion	3.15	$3.58 billion	$6.81	18.60

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

Dividends

E.On pays an annual dividend of $0.49 per share and has a dividend yield of 2.3%. American Electric Power pays an annual dividend of $3.80 per share and has a dividend yield of 3.0%. E.On pays out 32.0% of its earnings in the form of a dividend. American Electric Power pays out 55.8% 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 increased its dividend for 15 consecutive years. American Electric Power is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Recommendations

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

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
E.On	0	6	1	0	2.14
American Electric Power	0	9	13	0	2.59

American Electric Power has a consensus target price of $141.10, suggesting a potential upside of 11.39%. Given American Electric Power’s stronger consensus rating and higher probable upside, analysts clearly believe American Electric Power is more favorable than E.On.

Summary

American Electric Power beats E.On on 13 of the 17 factors compared between the two stocks.

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.

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.