Critical Comparison: Duke Energy (NYSE:DUK) & Entergy (NYSE:ETR)

Duke Energy (NYSE:DUK) and Entergy (NYSE:ETR) are both large-cap utilities companies, but which is the superior business? We will contrast the two businesses based on the strength of their institutional ownership, dividends, risk, earnings, analyst recommendations, valuation and profitability.

Dividends

Duke Energy pays an annual dividend of $4.34 per share and has a dividend yield of 3.4%. Entergy pays an annual dividend of $2.72 per share and has a dividend yield of 2.4%. Duke Energy pays out 63.5% of its earnings in the form of a dividend. Entergy pays out 62.5% 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. Duke Energy has increased its dividend for 20 consecutive years and Entergy has increased its dividend for 10 consecutive years. Duke Energy is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

This table compares Duke Energy and Entergy’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Duke Energy	15.94%	9.82%	2.71%
Entergy	14.63%	11.44%	2.68%

Volatility & Risk

Duke Energy has a beta of 0.33, meaning that its share price is 67% less volatile than the S&P 500. Comparatively, Entergy has a beta of 0.44, meaning that its share price is 56% less volatile than the S&P 500.

Analyst Ratings

This is a breakdown of recent recommendations for Duke Energy and Entergy, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Duke Energy	0	9	9	0	2.50
Entergy	0	2	20	0	2.91

Duke Energy currently has a consensus target price of $132.19, indicating a potential upside of 2.50%. Entergy has a consensus target price of $121.57, indicating a potential upside of 8.72%. Given Entergy’s stronger consensus rating and higher possible upside, analysts clearly believe Entergy is more favorable than Duke Energy.

Institutional & Insider Ownership

65.3% of Duke Energy shares are held by institutional investors. Comparatively, 88.1% of Entergy shares are held by institutional investors. 0.1% of Duke Energy shares are held by company insiders. Comparatively, 0.2% of Entergy shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Earnings & Valuation

This table compares Duke Energy and Entergy”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Duke Energy	$32.24 billion	3.12	$4.97 billion	$6.84	18.85
Entergy	$14.04 billion	3.81	$1.77 billion	$4.35	25.70

Duke Energy has higher revenue and earnings than Entergy. Duke Energy is trading at a lower price-to-earnings ratio than Entergy, indicating that it is currently the more affordable of the two stocks.

Summary

Entergy beats Duke Energy on 10 of the 17 factors compared between the two stocks.

About Duke Energy

Duke Energy is a U.S. energy company focused primarily on regulated electric utilities and natural gas distribution. Its businesses generate, transmit and distribute electricity, and provide natural gas service to residential, commercial and industrial customers. The company serves electric customers in North Carolina, South Carolina, Florida, Indiana, Ohio and Kentucky. Its natural gas distribution operations serve customers in several states, including North Carolina, South Carolina, Ohio, Kentucky and Tennessee.

About Entergy

Entergy Corporation is an investor-owned energy company headquartered in New Orleans. Its primary business is providing regulated electric utility service to residential, commercial and industrial customers. Through its utility subsidiaries, Entergy serves communities in Arkansas, Louisiana, Mississippi and Texas. Its operations include generating, transmitting and distributing electricity, with power produced from a mix of sources that includes nuclear energy. The company traces its corporate history to Middle South Utilities, which adopted the Entergy name in 1989.