Financial Comparison: PPL (NYSE:PPL) and Entergy (NYSE:ETR)

PPL (NYSE:PPL) and Entergy (NYSE:ETR) are both large-cap utilities companies, but which is the better stock? We will compare the two businesses based on the strength of their earnings, analyst recommendations, dividends, valuation, risk, profitability and institutional ownership.

Dividends

PPL pays an annual dividend of $1.66 per share and has a dividend yield of 6.4%. Entergy pays an annual dividend of $3.72 per share and has a dividend yield of 4.0%. PPL pays out 67.8% of its earnings in the form of a dividend. Entergy pays out 68.9% 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. PPL has increased its dividend for 8 consecutive years and Entergy has increased its dividend for 5 consecutive years. PPL is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Ratings

This is a breakdown of recent ratings and recommmendations for PPL and Entergy, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
PPL 1 8 8 0 2.41
Entergy 0 3 10 0 2.77

PPL currently has a consensus price target of $37.16, indicating a potential upside of 44.24%. Entergy has a consensus price target of $116.92, indicating a potential upside of 24.69%. Given PPL’s higher possible upside, equities analysts plainly believe PPL is more favorable than Entergy.

Volatility and Risk

PPL has a beta of 0.76, meaning that its stock price is 24% less volatile than the S&P 500. Comparatively, Entergy has a beta of 0.58, meaning that its stock price is 42% less volatile than the S&P 500.

Earnings and Valuation

This table compares PPL and Entergy’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
PPL $7.77 billion 2.55 $1.75 billion $2.45 10.51
Entergy $10.88 billion 1.73 $1.26 billion $5.40 17.36

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

Profitability

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

Net Margins Return on Equity Return on Assets
PPL 23.68% 14.46% 4.01%
Entergy 10.50% 11.40% 2.24%

Insider and Institutional Ownership

66.7% of PPL shares are held by institutional investors. Comparatively, 86.2% of Entergy shares are held by institutional investors. 0.2% of PPL shares are held by insiders. Comparatively, 0.3% of Entergy shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Summary

PPL beats Entergy on 10 of the 17 factors compared between the two stocks.

About PPL

PPL Corporation, a utility holding company, delivers electricity and natural gas in the United States and the United Kingdom. The company operates through three segments: U.K. Regulated, Kentucky Regulated, and Pennsylvania Regulated. It serves approximately 414,000 electric and 328,000 natural gas customers in Louisville and adjacent areas in Kentucky; 527,000 electric customers in central, southeastern, and western Kentucky; and 28,000 electric customers in 5 counties in southwestern Virginia. The company also provides electric delivery services to approximately 1.4 million customers in Pennsylvania; operates electricity distribution networks in the United Kingdom; generates electricity from coal, gas, hydro, and solar sources in Kentucky; and sells wholesale electricity to 10 municipalities in Kentucky. PPL Corporation was founded in 1920 and is headquartered in Allentown, Pennsylvania.

About Entergy

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.

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