Financial Contrast: ITC (ITC) versus Atlantica Yield (AY)

ITC (NYSE: ITC) and Atlantica Yield (NASDAQ:AY) are both utilities companies, but which is the superior investment? We will contrast the two companies based on the strength of their profitability, dividends, risk, earnings, institutional ownership, analyst recommendations and valuation.

Analyst Ratings

This is a summary of current ratings and recommmendations for ITC and Atlantica Yield, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
ITC 0 0 0 0 N/A
Atlantica Yield 0 1 3 0 2.75

Atlantica Yield has a consensus price target of $24.75, suggesting a potential upside of 24.62%.

Dividends

ITC pays an annual dividend of $0.86 per share. Atlantica Yield pays an annual dividend of $1.16 per share and has a dividend yield of 5.8%. ITC pays out 58.1% of its earnings in the form of a dividend. Atlantica Yield pays out 429.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Atlantica Yield has increased its dividend for 6 consecutive years. Atlantica Yield is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Valuation and Earnings

This table compares ITC and Atlantica Yield’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
ITC N/A N/A N/A $1.48 N/A
Atlantica Yield $971.80 million 2.05 -$4.85 million $0.27 73.56

ITC has higher earnings, but lower revenue than Atlantica Yield. ITC is trading at a lower price-to-earnings ratio than Atlantica Yield, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares ITC and Atlantica Yield’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
ITC 27.42% 16.62% 3.79%
Atlantica Yield 2.85% 1.41% 0.27%

Institutional & Insider Ownership

84.2% of ITC shares are held by institutional investors. Comparatively, 51.6% of Atlantica Yield shares are held by institutional investors. 3.2% of ITC shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Summary

ITC beats Atlantica Yield on 7 of the 12 factors compared between the two stocks.

ITC Company Profile

ITC Holdings Corp. (ITC Holdings) is a holding company. The Company is engaged in owning, operating, maintaining and investing in transmission infrastructure. The Company’s business consists primarily of the electric transmission operations of its Regulated Operating Subsidiaries. Its Regulated Operating Subsidiaries include International Transmission Company (ITCTransmission), Michigan Electric Transmission Company, LLC (METC), ITC Midwest LLC (ITC Midwest). The operations performed by its Regulated Operating Subsidiaries fall into the various categories, such as asset planning; engineering, design and construction; maintenance, and real time operations. Its customers include investor-owned utilities, municipalities, cooperatives, power marketers and alternative energy suppliers. It owns and operates high-voltage systems in Michigan’s Lower Peninsula and portions of Iowa, Minnesota, Illinois, Missouri, Kansas and Oklahoma.

Atlantica Yield Company Profile

Atlantica Yield plc, formerly Abengoa Yield plc, is a total return company. The Company owns, manages, and acquires renewable energy, conventional power, electric transmission lines and water assets, focused on North America (the United States and Mexico), South America (Peru, Chile, Brazil and Uruguay) and Europe, Middle East and Africa (Spain, Algeria and South Africa). Its segments include North America, South America and EMEA. It operates in business sectors, including renewable energy, conventional power, electric transmission lines and water. As of December 31, 2016, it owned or had interests in 21 assets, comprising 1,442 megawatt (MW) of renewable energy generation, 300 MW of conventional power generation, 1,099 miles of electric transmission lines, as well as an exchangeable preferred equity investment in Abengoa Concessoes Brasil Holding S.A., (ACBH). The renewable energy sector includes its activities related to the production electricity from solar power and wind plants.

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