FirstEnergy (NYSE:FE – Get Free Report) and RWE (OTCMKTS:RWEOY – Get Free Report) are both large-cap utilities companies, but which is the superior business? We will contrast the two companies based on the strength of their dividends, valuation, earnings, profitability, analyst recommendations, risk and institutional ownership.
Earnings & Valuation
This table compares FirstEnergy and RWE”s revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| FirstEnergy | $15.82 billion | 1.77 | $1.02 billion | $1.88 | 25.73 |
| RWE | $19.94 billion | 2.39 | $3.54 billion | $3.79 | 17.33 |
Dividends
FirstEnergy pays an annual dividend of $1.86 per share and has a dividend yield of 3.8%. RWE pays an annual dividend of $1.00 per share and has a dividend yield of 1.5%. 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. RWE pays out 26.4% of its earnings in the form of a dividend. FirstEnergy has raised its dividend for 3 consecutive years. FirstEnergy is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Volatility and Risk
FirstEnergy has a beta of 0.47, indicating that its share price is 53% less volatile than the S&P 500. Comparatively, RWE has a beta of 0.62, indicating that its share price is 38% less volatile than the S&P 500.
Profitability
This table compares FirstEnergy and RWE’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% |
| RWE | 15.16% | 4.77% | 1.83% |
Insider & Institutional Ownership
89.4% of FirstEnergy shares are owned by institutional investors. 0.1% of FirstEnergy shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.
Analyst Recommendations
This is a summary of recent ratings and price targets for FirstEnergy and RWE, as reported by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| FirstEnergy | 0 | 6 | 7 | 0 | 2.54 |
| RWE | 0 | 5 | 2 | 0 | 2.29 |
FirstEnergy currently has a consensus price target of $52.83, indicating a potential upside of 9.21%. RWE has a consensus price target of $53.30, indicating a potential downside of 18.86%. Given FirstEnergy’s stronger consensus rating and higher possible upside, equities research analysts clearly believe FirstEnergy is more favorable than RWE.
Summary
FirstEnergy beats RWE on 10 of the 17 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 RWE
RWE Aktiengesellschaft generates and supplies electricity from renewable and conventional sources in Germany, the United Kingdom, rest of Europe, North America, and internationally. It operates through five segments: Offshore Wind; Onshore Wind/Solar; Hydro/Biomass/Gas; Supply & Trading; and Coal/Nuclear. The company generates wind, hydro, solar, nuclear, gas, and biomass electricity. It also trades in electricity, gas, and energy commodities; operates gas storage facilities; and engages in battery storage activities. The company serves commercial, industrial, and corporate customers. RWE Aktiengesellschaft was founded in 1898 and is headquartered in Essen, Germany.
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