El Paso Electric (NYSE: EE) and CPFL Energia (NYSE:CPL) are both mid-cap utilities companies, but which is the superior investment? We will contrast the two companies based on the strength of their analyst recommendations, risk, valuation, earnings, profitability, institutional ownership and dividends.
This table compares El Paso Electric and CPFL Energia’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|El Paso Electric||10.13%||8.44%||2.67%|
98.7% of El Paso Electric shares are held by institutional investors. Comparatively, 1.8% of CPFL Energia shares are held by institutional investors. 1.3% of El Paso Electric shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.
Risk & Volatility
El Paso Electric has a beta of 0.47, indicating that its stock price is 53% less volatile than the S&P 500. Comparatively, CPFL Energia has a beta of 1.31, indicating that its stock price is 31% more volatile than the S&P 500.
This is a breakdown of recent ratings and recommmendations for El Paso Electric and CPFL Energia, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|El Paso Electric||1||3||0||0||1.75|
El Paso Electric currently has a consensus target price of $55.50, indicating a potential upside of 1.65%. Given El Paso Electric’s higher possible upside, analysts plainly believe El Paso Electric is more favorable than CPFL Energia.
Earnings & Valuation
This table compares El Paso Electric and CPFL Energia’s top-line revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|El Paso Electric||$886.94 million||2.50||$96.76 million||$2.40||22.75|
|CPFL Energia||$5.51 billion||1.05||$258.28 million||$0.51||22.25|
CPFL Energia has higher revenue and earnings than El Paso Electric. CPFL Energia is trading at a lower price-to-earnings ratio than El Paso Electric, indicating that it is currently the more affordable of the two stocks.
El Paso Electric pays an annual dividend of $1.34 per share and has a dividend yield of 2.5%. CPFL Energia pays an annual dividend of $0.12 per share and has a dividend yield of 1.1%. El Paso Electric pays out 55.8% of its earnings in the form of a dividend. CPFL Energia pays out 23.5% 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. El Paso Electric has increased its dividend for 5 consecutive years and CPFL Energia has increased its dividend for 3 consecutive years. El Paso Electric is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
El Paso Electric beats CPFL Energia on 11 of the 15 factors compared between the two stocks.
About El Paso Electric
El Paso Electric Company is a public utility company. As of December 31, 2016, the Company was engaged in the generation, transmission and distribution of electricity in an area of approximately 10,000 square miles in west Texas and southern New Mexico. As of December 31, 2016, the Company owned or had ownership interests in several electrical generating facilities providing it with a generating capability of approximately 2,080 megawatts (MW). The Company’s energy sources consists of nuclear fuel, natural gas, coal, purchased power and generated by Company-owned solar photovoltaic panels. As of December 31, 2016, the Company had power purchase agreements for 107 MW from solar photovoltaic generation facilities. As of December 31, 2016, the Company served approximately 411,100 residential, commercial, industrial, public authority and wholesale customers. The Company distributes electricity to retail customers principally in El Paso, Texas and Las Cruces, New Mexico.
About CPFL Energia
CPFL Energia S.A. is a holding company. The Company, through its subsidiaries, distributes, generates, transmits and commercializes electricity in Brazil, as well as provides energy-related services. Its segments include Distribution, Conventional Generation Sources, Renewable Energy Generation, Commercialization and Services. The Company operates its distribution segment through its eight distributors. Its installed capacity in conventional generation is approximately 2,200 megawatt (MW). The Company, through its subsidiary CPFL Geracao, holds equity interests in eight Hydroelectric Power Plants. It operates in the segment of generation of energy of renewable sources, such as wind, biomass thermal plants, SHPPs and solar, through its subsidiary, CPFL Renovaveis. The Company operates in the segment of commercialization (power competitive supply) through its subsidiary, CPFL Brasil. The Company operates in the segment of value-added services providing electricity-related services.
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