Critical Analysis: American Electric Power (NASDAQ:AEP) and Iberdrola (OTCMKTS:IBDRY)

American Electric Power (NASDAQ:AEPGet Free Report) and Iberdrola (OTCMKTS:IBDRYGet Free Report) are both large-cap utilities companies, but which is the superior stock? We will contrast the two companies based on the strength of their analyst recommendations, risk, earnings, profitability, dividends, valuation and institutional ownership.

Profitability

This table compares American Electric Power and Iberdrola’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
American Electric Power 16.29% 10.21% 2.89%
Iberdrola 13.40% 9.88% 3.81%

Risk and Volatility

American Electric Power has a beta of 0.56, indicating that its stock price is 44% less volatile than the S&P 500. Comparatively, Iberdrola has a beta of 0.66, indicating that its stock price is 34% less volatile than the S&P 500.

Institutional and Insider Ownership

75.2% of American Electric Power shares are held by institutional investors. Comparatively, 0.0% of Iberdrola shares are held by institutional investors. 0.1% of American Electric Power shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Dividends

American Electric Power pays an annual dividend of $3.80 per share and has a dividend yield of 2.9%. Iberdrola pays an annual dividend of $1.80 per share and has a dividend yield of 1.9%. American Electric Power pays out 55.8% of its earnings in the form of a dividend. Iberdrola pays out 44.3% 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. American Electric Power has raised its dividend for 15 consecutive years. American Electric Power is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Ratings

This is a summary of current recommendations for American Electric Power and Iberdrola, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
American Electric Power 0 9 12 1 2.64
Iberdrola 1 5 1 0 2.00

American Electric Power currently has a consensus target price of $141.24, suggesting a potential upside of 8.97%. Given American Electric Power’s stronger consensus rating and higher possible upside, equities analysts plainly believe American Electric Power is more favorable than Iberdrola.

Valuation and Earnings

This table compares American Electric Power and Iberdrola”s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
American Electric Power $21.88 billion 3.22 $3.58 billion $6.81 19.03
Iberdrola $51.52 billion 3.04 $7.11 billion $4.06 22.87

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

Summary

American Electric Power beats Iberdrola on 12 of the 18 factors compared between the two stocks.

About American Electric Power

(Get Free Report)

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.

About Iberdrola

(Get Free Report)

Iberdrola, S.A. engages in the generation, transmission, distribution, and supply of electricity in Spain, the United Kingdom, the United States, Mexico, Brazil, Germany, France, and Australia. It generates electricity from renewable sources, such as onshore and offshore wind, hydro, photovoltaic, combined cycle gas, and conventional nuclear, as well as through batteries. The company is also involved in the purchase and sale of electricity and gas on wholesale markets; energy retail supply activities, such as gas and electricity, and other products and services, including hydrogen, as well as non-renewable generation; and production of green hydrogen. It has a total installed capacity of 62,871 MW. In addition, the company offers heat pumps, self-consumption, electric mobility, solar, etc. services to residential customers; and management of energy facilities, as well as supplies green H2, industrial heat, etc. to industrial customers. Iberdrola, S.A. was founded in 1840 and is based in Bilbao, Spain.

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