Xcel Energy (NYSE:XEL) & NorthWestern Corporation (NWE) Critical Analysis

Xcel Energy (NYSE: XEL) and NorthWestern Corporation (NYSE:NWE) are both mid-cap utilities companies, but which is the better business? We will compare the two companies based on the strength of their dividends, risk, institutional ownership, profitability, valuation, earnings and analyst recommendations.

Earnings & Valuation

This table compares Xcel Energy and NorthWestern Corporation’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Xcel Energy $11.43 billion 2.18 $3.76 billion $2.27 21.59
NorthWestern Corporation $1.28 billion 2.24 $411.62 million $3.48 17.02

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

Insider and Institutional Ownership

72.6% of Xcel Energy shares are owned by institutional investors. Comparatively, 95.5% of NorthWestern Corporation shares are owned by institutional investors. 0.2% of Xcel Energy shares are owned by insiders. Comparatively, 1.3% of NorthWestern Corporation shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Analyst Recommendations

This is a summary of recent ratings for Xcel Energy and NorthWestern Corporation, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Xcel Energy 0 8 2 0 2.20
NorthWestern Corporation 2 1 0 0 1.33

Xcel Energy currently has a consensus target price of $46.70, indicating a potential downside of 4.69%. NorthWestern Corporation has a consensus target price of $57.33, indicating a potential downside of 3.22%. Given NorthWestern Corporation’s higher possible upside, analysts plainly believe NorthWestern Corporation is more favorable than Xcel Energy.

Dividends

Xcel Energy pays an annual dividend of $1.44 per share and has a dividend yield of 2.9%. NorthWestern Corporation pays an annual dividend of $2.10 per share and has a dividend yield of 3.5%. Xcel Energy pays out 63.4% of its earnings in the form of a dividend. NorthWestern Corporation pays out 60.3% 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. Xcel Energy has increased its dividend for 13 consecutive years and NorthWestern Corporation has increased its dividend for 8 consecutive years. NorthWestern Corporation is clearly the better dividend stock, given its higher yield and lower payout ratio.

Profitability

This table compares Xcel Energy and NorthWestern Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Xcel Energy 10.08% 10.42% 2.80%
NorthWestern Corporation 13.17% 9.31% 2.86%

Volatility & Risk

Xcel Energy has a beta of 0.19, indicating that its share price is 81% less volatile than the S&P 500. Comparatively, NorthWestern Corporation has a beta of 0.36, indicating that its share price is 64% less volatile than the S&P 500.

Summary

NorthWestern Corporation beats Xcel Energy on 10 of the 17 factors compared between the two stocks.

About Xcel Energy

Xcel Energy Inc. is a public utility holding company. The Company’s operations include the activity of four utility subsidiaries that serve electric and natural gas customers in eight states. The Company’s segments include regulated electric utility, regulated natural gas utility and all other. The Company’s utility subsidiaries include NSP-Minnesota, NSP-Wisconsin, Public Service Company of Colorado (PSCo) and Southwestern Public Service Co. (SPS), which serve customers in portions of Colorado, Michigan, Minnesota, New Mexico, North Dakota, South Dakota, Texas and Wisconsin. Along with WYCO Development LLC (WYCO), a joint venture formed with Colorado Interstate Gas Company, LLC (CIG) to develop and lease natural gas pipelines storage and compression facilities, and WestGas InterState, Inc. (WGI), an interstate natural gas pipeline company, these companies comprise the regulated utility operations.

About NorthWestern Corporation

NorthWestern Corporation, doing business as North-Western Energy, provides electricity and natural gas. The Company’s segments are Electric operations, Natural gas operations and All other. As of December 31, 2016, the Company provided electricity and natural gas to approximately 709,600 customers in Montana, South Dakota and Nebraska. It generates and distributes electricity in South Dakota; distributes natural gas in South Dakota and Nebraska, and generates and distributes electricity and distributes natural gas in Montana. Its regulated electric utility business in Montana includes generation, transmission and distribution. As of December 31, 2016, it provided retail electricity in 110 communities in South Dakota. Its regulated natural gas utility business in Montana includes production, storage, transmission and distribution. As of December 31, 2016, it provided natural gas to approximately 88,500 customers in 60 South Dakota communities and four Nebraska communities.

Receive News & Ratings for Xcel Energy Inc. Daily - Enter your email address below to receive a concise daily summary of the latest news and analysts' ratings for Xcel Energy Inc. and related companies with MarketBeat.com's FREE daily email newsletter.

Latest News

Leave a Reply