Head to Head Review: Edison International (EIX) and Xcel Energy (XEL)

Edison International (NYSE: EIX) and Xcel Energy (NYSE:XEL) are both large-cap utilities companies, but which is the better business? We will compare the two companies based on the strength of their profitability, analyst recommendations, dividends, earnings, risk, valuation and institutional ownership.

Profitability

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

Net Margins Return on Equity Return on Assets
Edison International 12.64% 10.58% 2.92%
Xcel Energy 10.08% 10.42% 2.80%

Institutional & Insider Ownership

81.9% of Edison International shares are owned by institutional investors. Comparatively, 72.0% of Xcel Energy shares are owned by institutional investors. 0.4% of Edison International shares are owned by insiders. Comparatively, 0.2% of Xcel Energy shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Earnings & Valuation

This table compares Edison International and Xcel Energy’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Edison International $12.08 billion 2.15 $4.10 billion $4.27 18.63
Xcel Energy $11.43 billion 2.14 $3.76 billion $2.27 21.23

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

Risk and Volatility

Edison International has a beta of 0.22, indicating that its stock price is 78% less volatile than the S&P 500. Comparatively, Xcel Energy has a beta of 0.19, indicating that its stock price is 81% less volatile than the S&P 500.

Analyst Ratings

This is a summary of current ratings and recommmendations for Edison International and Xcel Energy, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Edison International 0 6 6 0 2.50
Xcel Energy 0 8 2 0 2.20

Edison International currently has a consensus target price of $84.59, suggesting a potential upside of 6.36%. Xcel Energy has a consensus target price of $46.70, suggesting a potential downside of 3.09%. Given Edison International’s stronger consensus rating and higher probable upside, equities analysts plainly believe Edison International is more favorable than Xcel Energy.

Dividends

Edison International pays an annual dividend of $2.17 per share and has a dividend yield of 2.7%. Xcel Energy pays an annual dividend of $1.44 per share and has a dividend yield of 3.0%. Edison International pays out 50.8% of its earnings in the form of a dividend. Xcel Energy pays out 63.4% 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. Edison International has raised its dividend for 13 consecutive years and Xcel Energy has raised its dividend for 12 consecutive years.

Summary

Edison International beats Xcel Energy on 15 of the 17 factors compared between the two stocks.

About Edison International

Edison International is the holding company of Southern California Edison Company (SCE). As of December 31, 2016, SCE, a public utility, was primarily engaged in the business of supplying and delivering electricity to an approximately 50,000 square mile area of southern California. The Company is also the parent company of Edison Energy Group, Inc. (Edison Energy Group), a holding company for subsidiaries engaged in pursuing competitive business opportunities across energy services and distributed solar to commercial and industrial customers. SCE’s projects include West of Devers, Mesa Substation, Alberhill System, Riverside Transmission Reliability, Eldorado-Lugo-Mohave Upgrade, Tehachapi and Coolwater-Lugo. As of December 31, 2016, the West of Devers Project consisted of upgrading and reconfiguring approximately 48 miles of existing 220 kilovolt (kV) transmission lines between the Devers, El Casco, Vista and San Bernardino substations.

About Xcel Energy

Xcel Energy Inc. is a public utility holding company. The Company’s operations include the activity of four utility subsidiaries that serve electric and natural gas customers in eight states. The Company’s segments include regulated electric utility, regulated natural gas utility and all other. The Company’s utility subsidiaries include NSP-Minnesota, NSP-Wisconsin, Public Service Company of Colorado (PSCo) and Southwestern Public Service Co. (SPS), which serve customers in portions of Colorado, Michigan, Minnesota, New Mexico, North Dakota, South Dakota, Texas and Wisconsin. Along with WYCO Development LLC (WYCO), a joint venture formed with Colorado Interstate Gas Company, LLC (CIG) to develop and lease natural gas pipelines storage and compression facilities, and WestGas InterState, Inc. (WGI), an interstate natural gas pipeline company, these companies comprise the regulated utility operations.

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