Analyzing PPL (NYSE:PPL) and Unitil (NYSE:UTL)

Unitil (NYSE:UTL) and PPL (NYSE:PPL) are both utilities companies, but which is the better investment? We will contrast the two companies based on the strength of their institutional ownership, risk, analyst recommendations, profitability, dividends, valuation and earnings.

Earnings & Valuation

This table compares Unitil and PPL”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Unitil	$536.00 million	1.68	$50.20 million	$3.16	15.87
PPL	$9.04 billion	2.91	$1.18 billion	$1.64	21.29

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

Dividends

Unitil pays an annual dividend of $1.90 per share and has a dividend yield of 3.8%. PPL pays an annual dividend of $1.14 per share and has a dividend yield of 3.3%. Unitil pays out 60.1% of its earnings in the form of a dividend. PPL pays out 69.5% 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. Unitil has raised its dividend for 12 consecutive years and PPL has raised its dividend for 3 consecutive years. Unitil is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

This table compares Unitil and PPL’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Unitil	9.60%	9.89%	2.89%
PPL	13.09%	9.41%	3.10%

Insider and Institutional Ownership

76.8% of Unitil shares are owned by institutional investors. Comparatively, 77.0% of PPL shares are owned by institutional investors. 2.2% of Unitil shares are owned by company insiders. Comparatively, 0.3% of PPL shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Analyst Recommendations

This is a summary of current recommendations for Unitil and PPL, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Unitil	0	5	0	0	2.00
PPL	0	3	9	1	2.85

Unitil presently has a consensus price target of $56.50, indicating a potential upside of 12.67%. PPL has a consensus price target of $41.83, indicating a potential upside of 19.81%. Given PPL’s stronger consensus rating and higher possible upside, analysts clearly believe PPL is more favorable than Unitil.

Risk and Volatility

Unitil has a beta of 0.33, meaning that its share price is 67% less volatile than the S&P 500. Comparatively, PPL has a beta of 0.6, meaning that its share price is 40% less volatile than the S&P 500.

Summary

PPL beats Unitil on 12 of the 18 factors compared between the two stocks.

About Unitil

Unitil Corporation, a public utility holding company, engages in the distribution of electricity and natural gas. It operates through two segments, Utility Electric Operations, Utility Gas Operations. The company distributes electricity in the southeastern seacoast and state capital regions of New Hampshire, and the greater Fitchburg area of north central Massachusetts; and distributes natural gas in southeastern New Hampshire and portions of southern and central Maine, including the city of Portland and the Lewiston-Auburn area, as well as electricity and natural gas in the greater Fitchburg area of north central Massachusetts. It also operates 86 miles of interstate underground natural gas transmission pipeline that provides interstate natural gas pipeline access and transportation services primarily in Maine and New Hampshire. In addition, the company provides real estate management services. It serves approximately 108,100 electric customers and 87,500 natural gas customers. Unitil Corporation was incorporated in 1984 and is headquartered in Hampton, New Hampshire.

About PPL

PPL Corporation, an energy company, focuses on providing electricity and natural gas to approximately 3.6 million customers in the United States. It operates through three segments: Kentucky Regulated, Pennsylvania Regulated, and Rhode Island Regulated. The company delivers electricity to customers in Pennsylvania, Kentucky, Virginia, and Rhode Island; delivers natural gas to customers in Kentucky and Rhode Island; and generates electricity from power plants in Kentucky. PPL Corporation was founded in 1920 and is headquartered in Allentown, Pennsylvania.