Genie Energy (NYSE:GNE) & Pinnacle West Capital (NYSE:PNW) Critical Review

Pinnacle West Capital (NYSE:PNW) and Genie Energy (NYSE:GNE) are both utilities companies, but which is the superior investment? We will compare the two businesses based on the strength of their dividends, valuation, earnings, institutional ownership, risk, analyst recommendations and profitability.

Volatility & Risk

Pinnacle West Capital has a beta of 0.45, indicating that its stock price is 55% less volatile than the S&P 500. Comparatively, Genie Energy has a beta of 0.19, indicating that its stock price is 81% less volatile than the S&P 500.

Valuation & Earnings

This table compares Pinnacle West Capital and Genie Energy”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Pinnacle West Capital	$5.55 billion	2.03	$616.53 million	$5.22	17.84
Genie Energy	$502.62 million	0.84	$24.01 million	$0.81	19.81

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

Insider & Institutional Ownership

91.5% of Pinnacle West Capital shares are held by institutional investors. Comparatively, 49.2% of Genie Energy shares are held by institutional investors. 0.2% of Pinnacle West Capital shares are held by insiders. Comparatively, 18.5% of Genie Energy shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Analyst Ratings

This is a breakdown of recent ratings and target prices for Pinnacle West Capital and Genie Energy, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Pinnacle West Capital	0	11	4	0	2.27
Genie Energy	0	2	0	0	2.00

Pinnacle West Capital currently has a consensus price target of $104.21, suggesting a potential upside of 11.90%. Given Pinnacle West Capital’s stronger consensus rating and higher probable upside, analysts plainly believe Pinnacle West Capital is more favorable than Genie Energy.

Dividends

Pinnacle West Capital pays an annual dividend of $3.64 per share and has a dividend yield of 3.9%. Genie Energy pays an annual dividend of $0.30 per share and has a dividend yield of 1.9%. Pinnacle West Capital pays out 69.7% of its earnings in the form of a dividend. Genie Energy pays out 37.0% 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.

Profitability

This table compares Pinnacle West Capital and Genie Energy’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Pinnacle West Capital	11.52%	8.99%	2.08%
Genie Energy	5.05%	12.80%	7.82%

Summary

Pinnacle West Capital beats Genie Energy on 11 of the 16 factors compared between the two stocks.

About Pinnacle West Capital

Pinnacle West Capital Corporation, through its subsidiary, provides retail and wholesale electric services primarily in the state of Arizona. The company engages in the generation, transmission, and distribution of electricity using coal, nuclear, gas, oil, and solar generating facilities. Its transmission facilities include overhead lines and underground lines; and distribution facilities consist of overhead lines and underground primary cables. The company also owns and maintains transmission and distribution substations; and owns energy storage facilities. Pinnacle West Capital Corporation was incorporated in 1985 and is headquartered in Phoenix, Arizona.

About Genie Energy

Genie Energy Ltd., through its subsidiaries, engages in the supply of electricity and natural gas to residential and small business customers in the United States and internationally. It operates in two segments, GRE and Genie Renewables. The company also develops, constructs, and operates solar energy projects for commercial and industrial customers, as well as its own portfolio; provides energy brokerage and advisory services; markets community solar energy solutions; and manufactures and distributes solar panel, as well as engages in solar installation design and project management activities. Genie Energy Ltd. was incorporated in 2011 and is headquartered in Newark, New Jersey.