Xcel Energy (NASDAQ:XEL – Get Free Report) and American Electric Power (NASDAQ:AEP – Get Free Report) are both large-cap utilities companies, but which is the superior business? We will compare the two businesses based on the strength of their institutional ownership, risk, analyst recommendations, earnings, valuation, profitability and dividends.
Profitability
This table compares Xcel Energy and American Electric Power’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Xcel Energy | 15.28% | 10.65% | 2.97% |
| American Electric Power | 13.78% | 9.95% | 2.79% |
Valuation and Earnings
This table compares Xcel Energy and American Electric Power”s top-line revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Xcel Energy | $14.67 billion | 3.04 | $2.02 billion | $3.65 | 19.59 |
| American Electric Power | $21.88 billion | 2.98 | $3.58 billion | $5.83 | 20.54 |
American Electric Power has higher revenue and earnings than Xcel Energy. Xcel Energy 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
Xcel Energy pays an annual dividend of $2.37 per share and has a dividend yield of 3.3%. American Electric Power pays an annual dividend of $3.80 per share and has a dividend yield of 3.2%. Xcel Energy pays out 64.9% of its earnings in the form of a dividend. American Electric Power pays out 65.2% 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. Xcel Energy has increased its dividend for 22 consecutive years and American Electric Power has increased its dividend for 15 consecutive years. Xcel Energy 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 recommendations and price targets for Xcel Energy and American Electric Power, as provided by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Xcel Energy | 0 | 1 | 13 | 3 | 3.12 |
| American Electric Power | 0 | 9 | 13 | 0 | 2.59 |
Xcel Energy currently has a consensus target price of $91.65, indicating a potential upside of 28.20%. American Electric Power has a consensus target price of $139.62, indicating a potential upside of 16.61%. Given Xcel Energy’s stronger consensus rating and higher possible upside, equities research analysts clearly believe Xcel Energy is more favorable than American Electric Power.
Volatility and Risk
Xcel Energy has a beta of 0.36, indicating that its stock price is 64% less volatile than the S&P 500. Comparatively, American Electric Power has a beta of 0.48, indicating that its stock price is 52% less volatile than the S&P 500.
Institutional & Insider Ownership
78.4% of Xcel Energy shares are held by institutional investors. Comparatively, 75.2% of American Electric Power shares are held by institutional investors. 0.2% of Xcel Energy shares are held by company insiders. Comparatively, 0.1% of American Electric Power shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.
Summary
Xcel Energy beats American Electric Power on 12 of the 17 factors compared between the two stocks.
About Xcel Energy
Xcel Energy Inc., through its subsidiaries, engages in the generation, purchasing, transmission, distribution, and sale of electricity. It operates through Regulated Electric Utility, Regulated Natural Gas Utility, and All Other segments. The company generates electricity through wind, nuclear, hydroelectric, biomass, and solar energy sources, as well as coal, natural gas, oil, wood, and refuse-derived fuels. It also purchases, transports, distributes, and sells natural gas to retail customers, as well as transports customer-owned natural gas. In addition, the company develops and leases natural gas pipelines, and storage and compression facilities; and invests in rental housing projects and nonregulated assets, as well as procures equipment for the construction of renewable generation facilities. It serves residential, commercial, and industrial customers in the portions of Colorado, Michigan, Minnesota, New Mexico, North Dakota, South Dakota, Texas, and Wisconsin. The company was incorporated in 1909 and is headquartered in Minneapolis, Minnesota.
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.
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