Head-To-Head Analysis: Entergy (ETR) versus Dynegy (DYN)

Entergy (NYSE: DYN) and Dynegy (NYSE:DYN) are both utilities companies, but which is the superior business? We will contrast the two companies based on the strength of their analyst recommendations, profitability, dividends, risk, valuation, earnings and institutional ownership.

Risk & Volatility

Entergy has a beta of 0.48, meaning that its stock price is 52% less volatile than the S&P 500. Comparatively, Dynegy has a beta of 1.59, meaning that its stock price is 59% more volatile than the S&P 500.

Profitability

This table compares Entergy and Dynegy’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Entergy 2.73% 13.45% 2.34%
Dynegy 1.57% -11.03% -1.60%

Insider and Institutional Ownership

91.5% of Entergy shares are held by institutional investors. 0.2% of Entergy shares are held by insiders. Comparatively, 1.8% of Dynegy shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Valuation and Earnings

This table compares Entergy and Dynegy’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Entergy $11.07 billion 1.37 $425.35 million $7.20 11.63
Dynegy $4.84 billion 0.38 $76.00 million $0.22 58.23

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

Analyst Ratings

This is a breakdown of current recommendations and price targets for Entergy and Dynegy, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Entergy 0 5 8 0 2.62
Dynegy 0 3 4 0 2.57

Entergy presently has a consensus target price of $88.23, suggesting a potential upside of 5.33%. Dynegy has a consensus target price of $12.85, suggesting a potential upside of 0.31%. Given Entergy’s stronger consensus rating and higher probable upside, analysts clearly believe Entergy is more favorable than Dynegy.

Dividends

Entergy pays an annual dividend of $3.56 per share and has a dividend yield of 4.3%. Dynegy does not pay a dividend. Entergy pays out 49.4% of its earnings in the form of a dividend. Entergy has increased its dividend for 3 consecutive years.

Summary

Entergy beats Dynegy on 13 of the 17 factors compared between the two stocks.

Entergy Company Profile

Entergy Corporation, together with its subsidiaries, engages in the production and distribution of electricity in the United States. It generates electricity through gas/oil, nuclear, coal, hydro, and solar power sources. The company's Utility segment generates, transmits, distributes, and sells electric power in portions of Arkansas, Mississippi, Texas, and Louisiana, including the City of New Orleans; and distributes natural gas. Its Entergy Wholesale Commodities segment engages in the ownership, operation, and decommissioning of nuclear power plants located in the northern United States; sale of electric power to wholesale customers; provision of services to other nuclear power plant owners; and owning interests in non-nuclear power plants that sell electric power to wholesale customers. This segment sells energy to retail power providers, utilities, electric power co-operatives, power trading organizations, and other power generation companies. The company's power plants have approximately 30,000 megawatts (MW) of electric generating capacity, including approximately 9,000 MW of nuclear power. The company delivers electricity to 2.9 million utility customers in Arkansas, Louisiana, Mississippi, and Texas. Entergy Corporation was founded in 1949 and is based in New Orleans, Louisiana.

Dynegy Company Profile

Dynegy Inc., through its subsidiaries, produces and sells electric energy, capacity, and ancillary services in the United States. It operates in five segments: PJM, NY/NE, ERCOT, MISO, and CAISO. The company sells its services on a wholesale basis from its power generation facilities. It has a fleet of 43 power plants in 12 states totaling approximately 28,000 megawatts of generating capacity. The company serves a range of customers, including regional transmission organizations, independent system operators, integrated utilities, municipalities, electric cooperatives, transmission and distribution utilities, and power marketers; financial participants, such as banks and hedge funds; and residential, commercial, and industrial end-users. Dynegy Inc. was founded in 1984 and is headquartered in Houston, Texas.

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