Reviewing Pepco (NYSE:POM) & FirstEnergy (FE)

FirstEnergy (NYSE: FE) and Pepco (NYSE:POM) are both utilities companies, but which is the superior stock? We will contrast the two businesses based on the strength of their valuation, analyst recommendations, dividends, earnings, profitability, risk and institutional ownership.

Valuation & Earnings

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This table compares FirstEnergy and Pepco’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
FirstEnergy $14.02 billion 1.16 -$1.72 billion $3.07 11.14
Pepco N/A N/A N/A N/A N/A

Pepco has lower revenue, but higher earnings than FirstEnergy.

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for FirstEnergy and Pepco, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
FirstEnergy 0 7 7 0 2.50
Pepco 0 0 0 0 N/A

FirstEnergy currently has a consensus target price of $35.18, indicating a potential upside of 2.87%. Given FirstEnergy’s higher probable upside, equities analysts plainly believe FirstEnergy is more favorable than Pepco.

Insider and Institutional Ownership

78.8% of FirstEnergy shares are held by institutional investors. 0.3% of FirstEnergy shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Dividends

FirstEnergy pays an annual dividend of $1.44 per share and has a dividend yield of 4.2%. Pepco pays an annual dividend of $1.08 per share and has a dividend yield of 4.0%. FirstEnergy pays out 46.9% of its earnings in the form of a dividend.

Profitability

This table compares FirstEnergy and Pepco’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
FirstEnergy -12.30% 24.02% 3.17%
Pepco 10.52% 11.08% 2.95%

Summary

FirstEnergy beats Pepco on 8 of the 10 factors compared between the two stocks.

FirstEnergy Company Profile

FirstEnergy Corp. is a holding company. The Company is engaged in holding, directly or indirectly, all of the outstanding equity of its principal subsidiaries. Its segments include Regulated Distribution, Regulated Transmission, Competitive Energy Services (CES) and Corporate/Other. As of December 31, 2016, the Regulated Distribution segment distributed electricity through the Company’s 10 utility operating companies, serving approximately six million customers, and purchased power for its provider of last resort (POLR), standard offer service (SOS), standard offer service (SSO) and default service requirements in Ohio, Pennsylvania, New Jersey and Maryland. The Regulated Transmission segment transmits electricity through transmission facilities owned and operated by American Transmission Systems, Incorporated (ATSI) and Trans-Allegheny Interstate Line Company (TrAIL). The CES segment primarily supplies electricity to end use customers through retail and wholesale arrangements.

Pepco Company Profile

Pepco Holdings LLC, formerly Pepco Holdings, Inc., is a holding company. The Company, through its utility subsidiaries, is engaged in the transmission, distribution and default supply of electricity, and the distribution and supply of natural gas. The Company’s segments include Power Delivery, Pepco Energy Services, and Corporate and Other. The Company’s subsidiaries include Potomac Electric Power Company (Pepco), Delmarva Power & Light Company (DPL) and Atlantic City Electric Company (ACE). Pepco is engaged in the transmission, distribution and default supply of electricity. DPL is involved in the transmission, distribution and default supply of electricity, and distribution and supply of natural gas. ACE is engaged in the transmission, distribution and default supply of electricity. The Company’s subsidiaries own and operate a network of wires, substations and other equipment that are classified as transmission facilities, distribution facilities or common facilities.

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