Head-To-Head Analysis: CenterPoint Energy (CNP) and National Grid Transco (NGG)

National Grid Transco (NYSE: NGG) and CenterPoint Energy (NYSE:CNP) are both large-cap utilities companies, but which is the better investment? We will contrast the two businesses based on the strength of their dividends, profitability, institutional ownership, earnings, valuation, risk and analyst recommendations.

Risk & Volatility

National Grid Transco has a beta of 0.44, indicating that its stock price is 56% less volatile than the S&P 500. Comparatively, CenterPoint Energy has a beta of 0.62, indicating that its stock price is 38% less volatile than the S&P 500.

Insider & Institutional Ownership

5.6% of National Grid Transco shares are held by institutional investors. Comparatively, 78.0% of CenterPoint Energy shares are held by institutional investors. 0.2% of CenterPoint Energy shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Profitability

This table compares National Grid Transco and CenterPoint Energy’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
National Grid Transco N/A N/A N/A
CenterPoint Energy 6.59% 16.00% 2.58%

Dividends

National Grid Transco pays an annual dividend of $1.87 per share and has a dividend yield of 3.1%. CenterPoint Energy pays an annual dividend of $1.07 per share and has a dividend yield of 3.6%. CenterPoint Energy pays out 78.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. National Grid Transco has raised its dividend for 11 consecutive years.

Analyst Ratings

This is a summary of recent ratings for National Grid Transco and CenterPoint Energy, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
National Grid Transco 1 5 6 0 2.42
CenterPoint Energy 0 9 0 0 2.00

National Grid Transco presently has a consensus price target of $69.00, indicating a potential upside of 15.10%. CenterPoint Energy has a consensus price target of $29.38, indicating a potential upside of 0.05%. Given National Grid Transco’s stronger consensus rating and higher probable upside, research analysts clearly believe National Grid Transco is more favorable than CenterPoint Energy.

Valuation & Earnings

This table compares National Grid Transco and CenterPoint Energy’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
National Grid Transco $18.62 billion 2.19 $10.19 billion N/A N/A
CenterPoint Energy $7.53 billion 1.68 $432.00 million $1.37 21.43

National Grid Transco has higher revenue and earnings than CenterPoint Energy.

Summary

National Grid Transco beats CenterPoint Energy on 8 of the 15 factors compared between the two stocks.

National Grid Transco Company Profile

National Grid plc is an electricity and gas utility company focused on transmission and distribution activities in electricity and gas in both the United Kingdom and the United States. The Company’s segments include UK Electricity Transmission, which is engaged in high voltage electricity transmission networks in Great Britain; UK Gas Transmission, which is the gas transmission network in Great Britain and United Kingdom liquefied natural gas (LNG) storage activities; UK Gas Distribution, which includes approximately four of the eight regional networks of Great Britain’s gas distribution system, and US Regulated, which includes gas distribution networks, electricity distribution networks and high voltage electricity transmission networks in New York, and New England and electricity generation facilities in New York. Its other activities relate to non-regulated businesses and other commercial operations not included within the above segments.

CenterPoint Energy Company Profile

CenterPoint Energy, Inc. is a public utility holding company. The Company, through its subsidiaries, owns and operates electric transmission and distribution facilities, and natural gas distribution facilities. The Electric Transmission & Distribution segment provides electric transmission and distribution services to retail electric providers. Its Natural Gas Distribution segment offers intrastate natural gas sales to and natural gas transportation and distribution for residential, commercial and industrial customers. Its Energy Services segment includes non-rate regulated gas sales and transportation and storage services for commercial and industrial customers. Its Midstream Investments segment includes equity investment in Enable that owns, operates and develops natural gas and crude oil assets. Its Other Operations segment includes office buildings and other real estate used in its business operations and other corporate operations.

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