Critical Analysis: PNM Resources (PNM) and The Competition

PNM Resources (NYSE: PNM) is one of 81 publicly-traded companies in the “Electric Utilities” industry, but how does it compare to its peers? We will compare PNM Resources to related companies based on the strength of its earnings, risk, profitability, institutional ownership, dividends, valuation and analyst recommendations.

Analyst Recommendations

This is a breakdown of recent ratings and price targets for PNM Resources and its peers, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
PNM Resources 4 7 1 0 1.75
PNM Resources Competitors 541 2960 2393 43 2.33

PNM Resources presently has a consensus target price of $38.99, suggesting a potential downside of 11.28%. As a group, “Electric Utilities” companies have a potential upside of 9.52%. Given PNM Resources’ peers stronger consensus rating and higher probable upside, analysts plainly believe PNM Resources has less favorable growth aspects than its peers.

Volatility & Risk

PNM Resources has a beta of 0.36, meaning that its share price is 64% less volatile than the S&P 500. Comparatively, PNM Resources’ peers have a beta of 0.64, meaning that their average share price is 36% less volatile than the S&P 500.

Earnings and Valuation

This table compares PNM Resources and its peers revenue, earnings per share and valuation.

Gross Revenue Net Income Price/Earnings Ratio
PNM Resources $1.36 billion $117.37 million 22.20
PNM Resources Competitors $7.66 billion $831.80 million 57.14

PNM Resources’ peers have higher revenue and earnings than PNM Resources. PNM Resources is trading at a lower price-to-earnings ratio than its peers, indicating that it is currently more affordable than other companies in its industry.

Profitability

This table compares PNM Resources and its peers’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
PNM Resources 11.27% 9.18% 2.49%
PNM Resources Competitors -14.67% 9.66% 2.65%

Dividends

PNM Resources pays an annual dividend of $0.97 per share and has a dividend yield of 2.2%. PNM Resources pays out 49.0% of its earnings in the form of a dividend. As a group, “Electric Utilities” companies pay a dividend yield of 3.2% and pay out 103.2% of their earnings in the form of a dividend. PNM Resources has raised its dividend for 5 consecutive years.

Institutional and Insider Ownership

92.6% of PNM Resources shares are held by institutional investors. Comparatively, 65.6% of shares of all “Electric Utilities” companies are held by institutional investors. 1.3% of PNM Resources shares are held by insiders. Comparatively, 2.7% of shares of all “Electric Utilities” companies are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Summary

PNM Resources peers beat PNM Resources on 12 of the 15 factors compared.

About PNM Resources

PNM Resources, Inc. (PNMR) is an investor-owned holding company with approximately two regulated utilities providing electricity and electric services in New Mexico and Texas. PNMR’s electric utilities are Public Service Company of New Mexico (PNM) and Texas-New Mexico Power Company (TNMP). It operates in three segments: PNM, TNMP, and Corporate and Other. The Company, through its Website provides information, including news releases, notices of Webcasts, and filings. PNM is an electric utility that provides electric generation, transmission and distribution service to its rate-regulated customers. TNMP is a regulated utility operating in Texas. TNMP provides transmission and distribution services in Texas under the provisions of Texas Electric Choice Act (TECA) and the Texas Public Utility Regulatory Act. The Corporate and Other segment includes PNMR holding company activities, related to corporate level debt and PNMR Services Company.

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