Seeking Alpha
Technologist, writer, investor
Profile| Send Message|
( followers)  

Summary

  • The median dividend yield of these 7 electric utilities is 4.5%.
  • These 7 electric utilities have a median price-to-book value of 1.1.
  • The median percent above 52-week low of these 7 electric utilities is only 9%.

I knew I needed to expand my universe of potential companies if I was going to find an electric utility worth purchasing after being unimpressed with the investment opportunity I wrote about in Now Is The Time to Consider Consolidated Edison. I took to Bloomberg and identified all of the electric utilities currently trading on a stock exchange in the United States, 183 in total.

This article identifies the 7 electric utilities which appeared most often among best fifteen companies when looking individually at:

  • price to sales;
  • price to EBITDA;
  • dividend yield;
  • price to book;
  • price to earnings; and
  • percent above 52-week low.

METHODOLOGY

All metric and trading data was obtained from Yahoo! Finance. The original group of 183 electric utilities included some dodgy constituents indeed. These questionable companies were removed if they had trading volume below 10,000 shares and no price to earnings or price to book. This condensed the original list of 183 down to the 70 companies in Table 1 below.

These 70 electric utilities were compared against each other using the six metrics listed above. For each metric the companies were sorted by their respective metric value from least to greatest, except for dividend yield which was sorted from greatest to least. Each company was assigned an initial point value of zero. A point was then assigned to each of the top fifteen companies for each metric and a point was subtracted from each company in the bottom fifteen for each metric. This means a maximum of 6 points and a minimum of -6 points was possible. The distribution of cumulative points for all six metrics can be seen below in Chart 1 and a complete list of the 70 companies analyzed is available in Table 1.

Chart 1. Cumulative Point Distribution

Table 1. The 70 Electric Companies Analyzed

Symbol

Company

(NYSE:AEE)

Ameren Corporation

(NYSE:AEP)

American Electric Power Co., Inc.

(OTCPK:AESAY)

AES Tiet

(OTCPK:AGLNF)

AGL Energy Limited

(NYSE:ALE)

ALLETE, Inc.

(NYSE:AVA)

Avista Corp.

(NYSE:BKH)

Black Hills Corporation

(NYSE:CIG)

Companhia Energ

(NYSE:CMS)

CMS Energy Corp.

(NYSE:CNL)

Cleco Corporation

(NYSE:CPL)

CPFL Energia S.A.

(NYSE:CPN)

Calpine Corp.

(NYSE:D)

Dominion Resources, Inc.

(NYSE:DTE)

DTE Energy Company

(NYSE:DUK)

Duke Energy Corporation

(OTCPK:ECIFY)

Electricite de France SA

(NYSE:ED)

Consolidated Edison, Inc.

(NYSE:EDE)

The Empire District Electric Company

(NYSE:EDN)

Empresa Distribuidora y Comercializadora Norte S.A.

(NYSE:EE)

El Paso Electric Co.

(NYSE:EIX)

Edison International

(NYSE:ELP)

Companhia Paranaense de Energia

(NYSE:ENI)

Enersis S.A.

(OTCPK:ENLAY)

Enel SpA

(NASDAQ:ENOC)

EnerNOC, Inc.

(NYSE:EOC)

Empresa Nacional de Electricidad S.A.

(OTCQX:EONGY)

E.ON SE

(NYSE:ETR)

Entergy Corporation

(NYSE:EXC)

Exelon Corporation

(NYSE:FE)

FirstEnergy Corp.

(NYSE:GXP)

Great Plains Energy Incorporated

(NYSE:HE)

Hawaiian Electric Industries Inc.

(NYSE:HNP)

Huaneng Power International, Inc.

(NYSEMKT:HTM)

U.S. Geothermal Inc.

(OTCPK:IBDRY)

Iberdrola SA

(NYSE:IDA)

IdaCorp, Inc.

(NYSE:ITC)

ITC Holdings Corp.

(NYSE:KEP)

Korea Electric Power Corp.

(NYSE:LNT)

Alliant Energy Corporation

(NYSE:MDU)

MDU Resources Group Inc.

(NASDAQ:MGEE)

MGE Energy Inc.

(NYSE:NEE)

NextEra Energy, Inc.

(NYSE:NU)

Northeast Utilities

(NYSE:NWE)

Northwestern Corporation

(NYSE:NYLD)

NRG Yield, Inc.

(NYSE:OGE)

OGE Energy Corp.

(NYSE:ORA)

Ormat Technologies Inc.

(NASDAQ:OTTR)

Otter Tail Corporation

(NYSE:PAM)

Pampa Energia SA

(NYSE:PCG)

PG&E Corporation

(NYSE:PEG)

Public Service Enterprise Group Inc.

(NYSE:PIKE)

Pike Corporation

(NYSE:PNM)

PNM Resources, Inc.

(NYSE:PNW)

Pinnacle West Capital Corporation

(NYSE:POM)

Pepco Holdings, Inc.

(NYSE:POR)

Portland General Electric Company

(NYSE:PPL)

PPL Corporation

(OTCQX:RSHYY)

Open Joint-Stock Company RusHydro

(NYSE:SCG)

SCANA Corp.

(NYSE:SO)

Southern Company

(OTCPK:SSEZY)

SSE plc

(NYSE:TE)

TECO Energy, Inc.

(NYSE:TEG)

Integrys Energy Group, Inc.

(OTCPK:TEZNY)

TERNA - Rete Elettrica Nazionale Societ

(NYSE:UIL)

UIL Holdings Corporation

(NYSE:UNS)

UNS Energy Corporation

(NYSE:UTL)

Unitil Corp.

(NYSE:WEC)

Wisconsin Energy Corp.

(NYSE:WR)

Westar Energy, Inc.

(NYSE:XEL)

Xcel Energy Inc.

METRIC 1. PRICE TO SALES

Price to sales values were sorted from least to greatest. The median price to sales value of all 70 electric utilities was approximately 1.4, while the median price to sales value of the top fifteen was approximately 0.7. This means the companies in Table 2 are approximately half as cheap by price to sales than the average electric utility.

Table 2. Top Fifteen Ranked By Price To Sales

Company

Price to sales

EONGY

0.2

PIKE

0.4

KEP

0.5

SSEZY

0.5

ENLAY

0.5

EDN

0.6

ECIFY

0.7

TEG

0.7

HNP

0.7

PAM

0.8

HE

0.8

RSHYY

0.8

AGLNF

0.9

ELP

0.9

FE

1.0

METRIC 2. PRICE TO EBITDA

Price to EBITDA values were sorted from least to greatest. The median price-to-sales value of all 70 electric utilities was approximately 5.2, while the median price-to-EBITDA value of the top fifteen was approximately 3.4. This means the average electric utility is approximately 1.5 times more expensive by price to EBITDA than the companies in Table 3.

Table 3. Top Fifteen Ranked By Price To EBITDA

Company

Price to EBITDA

EDN

1.6

PAM

2.0

HNP

2.4

ENLAY

2.5

KEP

2.6

ECIFY

2.9

RSHYY

3.3

AESAY

3.4

ETR

3.6

EONGY

3.7

ENI

4.0

FE

4.1

PIKE

4.2

GXP

4.2

HTM

4.3

METRIC 3. DIVIDEND YIELD

Dividend yield values were sorted from greatest to least. The median dividend yield value of all 70 electric utilities was approximately 3.3%, while the median dividend yield value of the top fifteen was approximately 4.5%. This means the companies in Table 4 yield approximately 1.4 times more that of the average electric utility.

Table 4. Top Fifteen Ranked By Dividend Yield

Company

Dividend Yield (%)

CPL

6.3

CIG

5.3

TE

5.1

HE

5.0

SO

4.8

UIL

4.7

TEG

4.6

ED

4.5

PPL

4.3

DUK

4.3

ETR

4.2

FE

4.2

EOC

4.2

EDE

4.2

UTL

4.1

METRIC 4. PRICE TO BOOK

Price to book values were sorted from least to greatest. The median price-to-book value of all 70 electric utilities was approximately 1.6, while the median price-to-book value of the top fifteen was approximately 1.1. This means the companies in Table 5 are approximately 31% cheaper by price to book than the average electric utility.

Table 5. Top Fifteen Ranked By Price To Book

Company

Price to book

RSHYY

0.4

KEP

0.5

ELP

0.7

EONGY

0.8

HTM

0.9

IBDRY

1.0

ENLAY

1.0

GXP

1.1

AGLNF

1.1

PIKE

1.1

FE

1.2

DUK

1.2

ED

1.3

EDE

1.4

PNM

1.4

METRIC 5. PRICE TO EARNINGS

Price to earnings values were sorted from least to greatest. The median price-to-earnings value of all 70 electric utilities was approximately 18, while the median price-to-earnings value of the top fifteen was approximately 12.9. This means the average electric utility is approximately 1.4 times more expensive by price to earnings than the companies in Table 6.

Table 6. Top Fifteen Ranked By Price To Earnings

Company

Price to earnings

AESAY

6.0

CIG

6.2

ELP

7.8

HNP

8.0

EDN

8.3

RSHYY

10.3

ENLAY

12.3

IBDRY

12.9

ED

13.1

SCG

14.0

HE

14.1

ECIFY

14.2

EDE

14.6

TEG

14.8

ETR

14.8

METRIC 6. PERCENT ABOVE 52-WEEK LOW

Percent above 52-week low values were sorted from least to greatest. The median percent above 52-week low value of all 70 electric utilities was approximately 23.2%, while the median percent above 52-week low value of the top fifteen was approximately 9%. Additionally, ED, HE, PIKE, UIL, PNW and ALE each currently trade below the midpoint between their respective 52-week high and low.

Table 7. Top Fifteen By Percent Above 52-Week Low

Company

Percent above 52-week low (%)

ED

5.1

HE

6.1

PIKE

6.5

PNW

6.6

UIL

6.7

TE

8.1

ALE

8.2

SO

9.0

DUK

10.4

TEG

11.4

AGLNF

12.1

MGEE

13.9

OGE

14.1

SCG

14.2

OTTR

14.6

CONCLUSION

Only 27 of the 70 electric utilities managed to survive this analysis with at least one total cumulative point. The distribution of cumulative points for all six metrics can be seen in Chart 1 above and Table 8 below.

Table 8. Cumulative Point Distribution

Points

Companies

-4

2

-3

6

-2

8

-1

8

0

21

1

9

2

9

3

5

4

2

The 7 electric utilities that cumulatively outranked the other 63 are as follows:

4 Points

  • Hawaiian Electric Industries Inc. ; and
  • Integrys Energy Group, Inc.

3 Points

  • Entergy Corporation;
  • Consolidated Edison, Inc.;
  • FirstEnergy Corp.;
  • The Empire District Electric Company; and
  • Huaneng Power International, Inc.

Comment below if you think solar will make electric utilities obsolete or there is a better potential electric utility investment than one of the final seven.

Source: The 7 Best Electric Utilities Americans Can Own