American Electric Power (NASDAQ:AEP – Get Free Report) and Entergy (NYSE:ETR – Get Free Report) are both large-cap utilities companies, but which is the superior business? We will compare the two companies based on the strength of their profitability, earnings, analyst recommendations, risk, valuation, dividends and institutional ownership.
Institutional and Insider Ownership
75.2% of American Electric Power shares are held by institutional investors. Comparatively, 88.1% of Entergy shares are held by institutional investors. 0.1% of American Electric Power shares are held by company insiders. Comparatively, 0.2% of Entergy shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.
Analyst Recommendations
This is a breakdown of recent recommendations for American Electric Power and Entergy, as provided by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| American Electric Power | 0 | 9 | 13 | 0 | 2.59 |
| Entergy | 1 | 2 | 17 | 0 | 2.80 |
Profitability
This table compares American Electric Power and Entergy’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% |
| Entergy | 13.48% | 10.75% | 2.53% |
Earnings and Valuation
This table compares American Electric Power and Entergy”s gross revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| American Electric Power | $21.88 billion | 3.21 | $3.58 billion | $6.81 | 18.98 |
| Entergy | $13.29 billion | 3.83 | $1.77 billion | $3.92 | 28.34 |
American Electric Power has higher revenue and earnings than Entergy. American Electric Power is trading at a lower price-to-earnings ratio than Entergy, indicating that it is currently the more affordable of the two stocks.
Volatility & Risk
American Electric Power has a beta of 0.53, suggesting that its share price is 47% less volatile than the S&P 500. Comparatively, Entergy has a beta of 0.5, suggesting that its share price is 50% less volatile than the S&P 500.
Dividends
American Electric Power pays an annual dividend of $3.80 per share and has a dividend yield of 2.9%. Entergy pays an annual dividend of $2.56 per share and has a dividend yield of 2.3%. American Electric Power pays out 55.8% of its earnings in the form of a dividend. Entergy pays out 65.3% 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 and Entergy has raised its dividend for 10 consecutive years. American Electric Power is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Summary
American Electric Power beats Entergy on 10 of the 17 factors compared between the two stocks.
About American Electric Power
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 Entergy
Entergy Corporation, together with its subsidiaries, engages in the production and retail distribution of electricity in the United States. It generates, transmits, distributes, and sells electric power in portions of Arkansas, Louisiana, Mississippi, and Texas, including the City of New Orleans; and distributes natural gas. It also engages in the ownership of interests in non-nuclear power plants that sell electric power to wholesale customers, as well as provides decommissioning services to other nuclear power plant owners. It generates electricity through gas, nuclear, coal, hydro, and solar power sources. The company sells energy to retail power providers, utilities, electric power co-operatives, power trading organizations, and other power generation companies. The company’s power plants have approximately 24,000 megawatts of electric generating capacity. It delivers electricity to 3 million utility customers in Arkansas, Louisiana, Mississippi, and Texas. Entergy Corporation was founded in 1913 and is headquartered in New Orleans, Louisiana.
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