Eversource Energy (ES) vs. Algonquin Power & Utilities (AQN) Financial Analysis

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Eversource Energy (NYSE: AQN) and Algonquin Power & Utilities (NYSE:AQN) are both utilities companies, but which is the superior business? We will compare the two businesses based on the strength of their profitability, institutional ownership, earnings, valuation, dividends, analyst recommendations and risk.

Profitability

This table compares Eversource Energy and Algonquin Power & Utilities’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Eversource Energy 12.59% 9.07% 2.81%
Algonquin Power & Utilities 10.92% 10.25% 3.64%

Institutional & Insider Ownership

73.4% of Eversource Energy shares are held by institutional investors. Comparatively, 41.0% of Algonquin Power & Utilities shares are held by institutional investors. 0.5% of Eversource Energy shares are held by company 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 Recommendations

This is a breakdown of recent recommendations and price targets for Eversource Energy and Algonquin Power & Utilities, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Eversource Energy 0 5 7 0 2.58
Algonquin Power & Utilities 0 1 1 0 2.50

Eversource Energy currently has a consensus price target of $62.78, suggesting a potential upside of 0.99%. Algonquin Power & Utilities has a consensus price target of $12.00, suggesting a potential upside of 12.89%. Given Algonquin Power & Utilities’ higher possible upside, analysts plainly believe Algonquin Power & Utilities is more favorable than Eversource Energy.

Dividends

Eversource Energy pays an annual dividend of $2.02 per share and has a dividend yield of 3.2%. Algonquin Power & Utilities pays an annual dividend of $0.51 per share and has a dividend yield of 4.8%. Eversource Energy pays out 65.0% of its earnings in the form of a dividend. Algonquin Power & Utilities pays out 87.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Valuation and Earnings

This table compares Eversource Energy and Algonquin Power & Utilities’ gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Eversource Energy $7.75 billion 2.54 $987.99 million $3.11 19.99
Algonquin Power & Utilities $1.56 billion 3.22 $148.95 million $0.58 18.33

Eversource Energy has higher revenue and earnings than Algonquin Power & Utilities. Algonquin Power & Utilities is trading at a lower price-to-earnings ratio than Eversource Energy, indicating that it is currently the more affordable of the two stocks.

Risk and Volatility

Eversource Energy has a beta of 0.24, meaning that its share price is 76% less volatile than the S&P 500. Comparatively, Algonquin Power & Utilities has a beta of 0.75, meaning that its share price is 25% less volatile than the S&P 500.

Summary

Eversource Energy beats Algonquin Power & Utilities on 10 of the 16 factors compared between the two stocks.

Eversource Energy Company Profile

Eversource Energy, a public utility holding company, engages in the energy delivery business. The company operates in three segments: Electric Distribution, Electric Transmission, and Natural Gas Distribution. It is involved in the transmission and distribution of electricity; and distribution of natural gas. The company operates water regulated utilities. It also provides water services to approximately 226,000 customers. It serves residential, commercial, industrial, municipal, fire protection, and other customers in Connecticut, Massachusetts, and New Hampshire, the United States. The company was formerly known as Northeast Utilities and changed its name to Eversource Energy in April 2015. Eversource Energy was founded in 1927 and is based in Springfield, Massachusetts.

Algonquin Power & Utilities Company Profile

Algonquin Power & Utilities Corp., through its subsidiaries, owns and operates a portfolio of regulated and non-regulated generation, distribution, and transmission utility assets in Canada and the United States. The company generates and sells electrical energy through a portfolio of non-regulated renewable and clean energy power generation facilities. It owns or has interests in hydroelectric facilities with a generating capacity of approximately 120 megawatts (MW); wind powered generating facilities with a generating capacity of 1,050 MW; solar energy facilities with a generating capacity of 40 MW; and thermal energy facilities with a generating capacity of 335 MW. The company also owns and operates a portfolio of regulated electric, natural gas, water distribution, and wastewater collection utility systems. It serves approximately 265,000 electric connections; 337,000 natural gas connections; and 160,000 regulated water distribution and wastewater collection utility systems in the states of California, New Hampshire, Missouri, Kansas, Oklahoma, Arkansas, Georgia, Illinois, Iowa, Massachusetts, Arizona, and Texas. The company was incorporated in 1988 and is headquartered in Oakville, Canada.

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