Reviewing SCANA (SCG) & El Paso Electric (NYSE:EE)

SCANA (NYSE: SCG) and El Paso Electric (NYSE:EE) are both mid-cap utilities companies, but which is the superior investment? We will contrast the two businesses based on the strength of their earnings, risk, analyst recommendations, profitability, valuation, dividends and institutional ownership.

Analyst Recommendations

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This is a breakdown of recent ratings for SCANA and El Paso Electric, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
SCANA 2 6 2 0 2.00
El Paso Electric 1 2 0 0 1.67

SCANA currently has a consensus price target of $52.50, suggesting a potential upside of 40.11%. El Paso Electric has a consensus price target of $57.67, suggesting a potential upside of 14.53%. Given SCANA’s stronger consensus rating and higher probable upside, analysts clearly believe SCANA is more favorable than El Paso Electric.

Valuation and Earnings

This table compares SCANA and El Paso Electric’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
SCANA $4.41 billion 1.21 -$119.00 million $4.20 8.92
El Paso Electric $916.80 million 2.23 $98.26 million $2.42 20.81

El Paso Electric has lower revenue, but higher earnings than SCANA. SCANA is trading at a lower price-to-earnings ratio than El Paso Electric, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares SCANA and El Paso Electric’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
SCANA -2.70% 10.61% 3.16%
El Paso Electric 10.13% 8.39% 2.68%

Risk & Volatility

SCANA has a beta of 0.21, meaning that its stock price is 79% less volatile than the S&P 500. Comparatively, El Paso Electric has a beta of 0.39, meaning that its stock price is 61% less volatile than the S&P 500.

Institutional & Insider Ownership

70.3% of SCANA shares are owned by institutional investors. Comparatively, 97.4% of El Paso Electric shares are owned by institutional investors. 0.4% of SCANA shares are owned by company insiders. Comparatively, 1.3% of El Paso Electric shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Dividends

SCANA pays an annual dividend of $2.45 per share and has a dividend yield of 6.5%. El Paso Electric pays an annual dividend of $1.34 per share and has a dividend yield of 2.7%. SCANA pays out 58.3% of its earnings in the form of a dividend. El Paso Electric pays out 55.4% 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. SCANA has raised its dividend for 18 consecutive years and El Paso Electric has raised its dividend for 6 consecutive years. SCANA is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

SCANA beats El Paso Electric on 9 of the 17 factors compared between the two stocks.

SCANA Company Profile

SCANA Corporation, through its subsidiaries, engages in the generation, transmission, distribution, and sale of electricity to retail and wholesale customers in the United States. The company owns nuclear, coal, hydro, natural gas, oil, biomass, and solar generating facilities. It also purchases, sells, and transports natural gas; and offers energy-related services. As of December 31, 2017, the company provided electricity to approximately 719,000 customers; and natural gas to approximately 931,000 retail customers in South Carolina and North Carolina, as well as marketed natural gas to approximately 425,000 customers in Georgia. It serves municipalities, electric cooperatives, other investor-owned utilities, registered marketers, and federal and state electric agencies, as well as chemical, educational service, paper product, food product, lumber and wood product, health service, textile manufacturing, rubber and miscellaneous plastic product, automotive and tire, and fabricated metal product industries. The company was founded in 1924 and is based in Cayce, South Carolina.

El Paso Electric Company Profile

El Paso Electric Company, a public utility company, engages in the generation, transmission, and distribution of electricity in west Texas and southern New Mexico. It generates electricity through nuclear fuel, natural gas, and coal, as well as solar photovoltaic panels and wind turbines with a generating capability of approximately 2,082 megawatts. The company also sources electricity from purchased power. The company owns and has ownership interests in four 345 kilovolt (kv) transmission lines in New Mexico and Arizona; and three 500 kV lines in Arizona. It serves approximately 417,900 residential, commercial, and public authority customers; and distributes electricity to retail customers. El Paso Electric Company was founded in 1901 and is based in El Paso, Texas.

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