FirstEnergy (NYSE:FE – Get Free Report) and Exelon (NASDAQ:EXC – Get Free Report) are both large-cap utilities companies, but which is the better investment? We will contrast the two businesses based on the strength of their profitability, earnings, valuation, risk, institutional ownership, dividends and analyst recommendations.
Earnings and Valuation
This table compares FirstEnergy and Exelon”s top-line revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| FirstEnergy | $15.09 billion | 1.77 | $1.02 billion | $1.88 | 24.60 |
| Exelon | $24.26 billion | 1.85 | $2.77 billion | $2.73 | 15.93 |
Exelon has higher revenue and earnings than FirstEnergy. Exelon is trading at a lower price-to-earnings ratio than FirstEnergy, indicating that it is currently the more affordable of the two stocks.
Profitability
This table compares FirstEnergy and Exelon’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| FirstEnergy | 6.86% | 10.51% | 2.62% |
| Exelon | 10.99% | 9.81% | 2.43% |
Analyst Recommendations
This is a summary of recent ratings for FirstEnergy and Exelon, as reported by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| FirstEnergy | 0 | 5 | 6 | 0 | 2.55 |
| Exelon | 0 | 14 | 4 | 0 | 2.22 |
FirstEnergy presently has a consensus target price of $51.27, suggesting a potential upside of 10.87%. Exelon has a consensus target price of $49.20, suggesting a potential upside of 13.10%. Given Exelon’s higher probable upside, analysts clearly believe Exelon is more favorable than FirstEnergy.
Insider and Institutional Ownership
89.4% of FirstEnergy shares are owned by institutional investors. Comparatively, 80.9% of Exelon shares are owned by institutional investors. 0.1% of FirstEnergy shares are owned by insiders. Comparatively, 0.1% of Exelon 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.
Risk and Volatility
FirstEnergy has a beta of 0.43, suggesting that its stock price is 57% less volatile than the S&P 500. Comparatively, Exelon has a beta of 0.3, suggesting that its stock price is 70% less volatile than the S&P 500.
Dividends
FirstEnergy pays an annual dividend of $1.86 per share and has a dividend yield of 4.0%. Exelon pays an annual dividend of $1.68 per share and has a dividend yield of 3.9%. FirstEnergy pays out 98.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Exelon pays out 61.5% of its earnings in the form of a dividend. FirstEnergy has raised its dividend for 3 consecutive years and Exelon has raised its dividend for 3 consecutive years.
Summary
FirstEnergy beats Exelon on 9 of the 16 factors compared between the two stocks.
About FirstEnergy
FirstEnergy Corp., through its subsidiaries, generates, transmits, and distributes electricity in the United States. It operates through Regulated Distribution and Regulated Transmission segments. The company owns and operates coal-fired, nuclear, hydroelectric, wind, and solar power generating facilities. It operates 24,080 circuit miles of overhead and underground transmission lines; and electric distribution systems, including 274,518 miles of overhead pole line and underground conduit carrying primary, secondary, and street lighting circuits. The company serves approximately 6 million customers in Ohio, Pennsylvania, West Virginia, Maryland, New Jersey, and New York. FirstEnergy Corp. was incorporated in 1996 and is headquartered in Akron, Ohio.
About Exelon
Exelon Corporation, a utility services holding company, engages in the energy distribution and transmission businesses in the United States and Canada. The company is involved in the purchase and regulated retail sale of electricity and natural gas, transmission and distribution of electricity, and distribution of natural gas to retail customers. It also offers support services, including legal, human resources, information technology, supply management, financial, engineering, customer operations, transmission and distribution planning, asset management, system operations, and power procurement services. It serves distribution utilities, municipalities, and financial institutions, as well as commercial, industrial, governmental, and residential customers. Exelon Corporation was incorporated in 1999 and is headquartered in Chicago, Illinois.
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