Financial Contrast: Avangrid (NYSE:AGR) & DTE Energy (NYSE:DTE)

DTE Energy (NYSE:DTE) and Avangrid (NYSE:AGR) are both large-cap utilities companies, but which is the better investment? We will compare the two companies based on the strength of their analyst recommendations, risk, profitability, dividends, valuation, institutional ownership and earnings.

Profitability

This table compares DTE Energy and Avangrid’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
DTE Energy 9.77% 12.53% 3.39%
Avangrid 10.41% 4.54% 2.04%

Insider and Institutional Ownership

73.0% of DTE Energy shares are owned by institutional investors. Comparatively, 10.7% of Avangrid shares are owned by institutional investors. 0.6% of DTE Energy shares are owned by company insiders. Comparatively, 0.1% of Avangrid shares are owned by company 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.

Volatility and Risk

DTE Energy has a beta of 0.63, meaning that its share price is 37% less volatile than the S&P 500. Comparatively, Avangrid has a beta of 0.23, meaning that its share price is 77% less volatile than the S&P 500.

Analyst Ratings

This is a breakdown of recent ratings and recommmendations for DTE Energy and Avangrid, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
DTE Energy 1 6 5 1 2.46
Avangrid 0 3 2 0 2.40

DTE Energy currently has a consensus price target of $130.08, suggesting a potential upside of 14.40%. Avangrid has a consensus price target of $56.00, suggesting a potential upside of 10.45%. Given DTE Energy’s stronger consensus rating and higher probable upside, analysts clearly believe DTE Energy is more favorable than Avangrid.

Earnings & Valuation

This table compares DTE Energy and Avangrid’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
DTE Energy $12.18 billion 1.81 $1.37 billion $7.19 15.82
Avangrid $6.32 billion 3.11 $581.00 million $2.02 25.10

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

Dividends

DTE Energy pays an annual dividend of $3.30 per share and has a dividend yield of 2.9%. Avangrid pays an annual dividend of $1.76 per share and has a dividend yield of 3.5%. DTE Energy pays out 45.9% of its earnings in the form of a dividend. Avangrid pays out 87.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Avangrid has increased its dividend for 1 consecutive years. Avangrid is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

DTE Energy beats Avangrid on 13 of the 18 factors compared between the two stocks.

About DTE Energy

DTE Energy Co. operates as a diversified energy company, which engages in the provision of electricity and natural gas sales, distribution and storage services. It operates through the following segments: Electric, Gas, Non-Utility Operations, and Corporate & Other. The Electric segment engages in the generation, purchase, distribution and sale of electricity to residential, commercial and industrial customers in south-eastern Michigan. The Gas segment engages in the purchase, storage, transportation, distribution and sale of natural gas to residential, commercial and industrial customers throughout Michigan and the sale of storage and transportation capacity. The Non-Utility Operations segment engages in gas storage and pipelines, power and industrial projects, and energy trading. The Corporate & Other includes various holding company activities, holds certain non-utility debt, and holds energy-related investments. The company was founded in January 1995 and is headquartered in Detroit, MI.

About Avangrid

Avangrid, Inc. engages in the energy transmission and gas distribution. It operates through the following segments: Networks, Renewables, and Other. The Networks segment includes energy transmission and distribution, electric transmission, and gas distribution activities. The Renewables segment relating to renewable energy, mainly wind energy generation and trading related with such activities. The Other segment covers miscellaneous corporate revenues including intersegment eliminations. The company was founded in 1852 and is headquartered in Orange, CT.

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