Critical Contrast: Exelon (EXC) versus Entergy (ETR)

Exelon (NYSE: EXC) and Entergy (NYSE:ETR) are both large-cap utilities companies, but which is the better business? We will contrast the two businesses based on the strength of their valuation, dividends, analyst recommendations, risk, institutional ownership, profitability and earnings.

Profitability

This table compares Exelon and Entergy’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Exelon 11.53% 8.35% 2.14%
Entergy -7.82% 14.76% 2.67%

Insider & Institutional Ownership

78.0% of Exelon shares are owned by institutional investors. Comparatively, 82.8% of Entergy shares are owned by institutional investors. 0.7% of Exelon shares are owned by insiders. Comparatively, 0.2% of Entergy shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Earnings and Valuation

This table compares Exelon and Entergy’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Exelon $33.53 billion 1.07 $3.77 billion $3.95 9.41
Entergy $10.85 billion 1.24 -$564.50 million ($4.94) -15.11

Exelon has higher revenue and earnings than Entergy. Entergy is trading at a lower price-to-earnings ratio than Exelon, indicating that it is currently the more affordable of the two stocks.

Risk & Volatility

Exelon has a beta of 0.23, indicating that its share price is 77% less volatile than the S&P 500. Comparatively, Entergy has a beta of 0.5, indicating that its share price is 50% less volatile than the S&P 500.

Dividends

Exelon pays an annual dividend of $1.31 per share and has a dividend yield of 3.5%. Entergy pays an annual dividend of $3.56 per share and has a dividend yield of 4.8%. Exelon pays out 33.2% of its earnings in the form of a dividend. Entergy pays out -72.1% 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. Exelon has increased its dividend for 3 consecutive years and Entergy has increased its dividend for 2 consecutive years. Entergy is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Recommendations

This is a breakdown of recent ratings for Exelon and Entergy, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Exelon 1 4 11 0 2.63
Entergy 0 7 6 0 2.46

Exelon currently has a consensus target price of $40.89, indicating a potential upside of 10.02%. Entergy has a consensus target price of $84.54, indicating a potential upside of 13.28%. Given Entergy’s higher possible upside, analysts clearly believe Entergy is more favorable than Exelon.

Summary

Exelon beats Entergy on 9 of the 17 factors compared between the two stocks.

About Exelon

Exelon Corporation is a utility services holding company. The Company, through its subsidiary, Exelon Generation Company, LLC (Generation), is engaged in the energy generation business. The Company, through its subsidiaries, Commonwealth Edison Company (ComEd), PECO Energy Company (PECO), Baltimore Gas and Electric Company (BGE), Pepco Holdings LLC (PHI), Potomac Electric Power Company (Pepco), Delmarva Power & Light Company (DPL) and Atlantic City Electric Company (ACE), is engaged in the energy delivery businesses. It operates through 12 segments: Generation’s six segments: Mid-Atlantic, Midwest, New England, New York, ERCOT and Other Power Regions; ComEd; PECO; BGE, and PHI’s three utility segments: Pepco, DPL and ACE. Generation’s integrated business consists of the generation, physical delivery and marketing of power across geographical regions through its customer-facing business, Constellation, which sells electricity and natural gas to both wholesale and retail customers.

About Entergy

Entergy Corporation is a holding company. The Company is an integrated energy company engaged in electric power production and retail electric distribution operations. The Company operates through two business segments: Utility and Entergy Wholesale Commodities. The Utility segment includes the generation, transmission, distribution and sale of electric power to retail and wholesale customers in areas of Arkansas, Mississippi, Texas and Louisiana, including the City of New Orleans and operates a natural gas distribution business. The Entergy Wholesale Commodities segment includes the ownership, operation and decommissioning of nuclear power plants located in the northern United States and the sale of the electric power produced by its operating plants to wholesale customers. As of December 31, 2016, the Company owned and operated power plants with over 30,000 megawatts of aggregate electric generating capacity, including approximately 10,000 megawatts of nuclear-fueled capacity.

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