Critical Review: Consolidated Edison (ED) vs. Alliant Energy (LNT)

Consolidated Edison (NYSE: ED) and Alliant Energy (NYSE:LNT) are both utilities companies, but which is the better investment? We will compare the two businesses based on the strength of their profitability, earnings, institutional ownership, dividends, analyst recommendations, valuation and risk.

Dividends

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Consolidated Edison pays an annual dividend of $2.86 per share and has a dividend yield of 3.6%. Alliant Energy pays an annual dividend of $1.34 per share and has a dividend yield of 3.3%. Consolidated Edison pays out 69.9% of its earnings in the form of a dividend. Alliant Energy pays out 69.4% 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. Consolidated Edison has raised its dividend for 43 consecutive years and Alliant Energy has raised its dividend for 12 consecutive years. Consolidated Edison is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Earnings and Valuation

This table compares Consolidated Edison and Alliant Energy’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Consolidated Edison $12.03 billion 2.03 $1.53 billion $4.09 19.21
Alliant Energy $3.38 billion 2.81 $467.50 million $1.93 21.25

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

Risk & Volatility

Consolidated Edison has a beta of 0.05, indicating that its share price is 95% less volatile than the S&P 500. Comparatively, Alliant Energy has a beta of 0.31, indicating that its share price is 69% less volatile than the S&P 500.

Analyst Ratings

This is a summary of current recommendations and price targets for Consolidated Edison and Alliant Energy, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Consolidated Edison 4 5 1 0 1.70
Alliant Energy 0 5 0 0 2.00

Consolidated Edison currently has a consensus target price of $80.61, indicating a potential upside of 2.61%. Alliant Energy has a consensus target price of $43.40, indicating a potential upside of 5.80%. Given Alliant Energy’s stronger consensus rating and higher possible upside, analysts clearly believe Alliant Energy is more favorable than Consolidated Edison.

Profitability

This table compares Consolidated Edison and Alliant Energy’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Consolidated Edison 12.67% 8.51% 2.60%
Alliant Energy 13.82% 11.11% 3.26%

Insider and Institutional Ownership

56.7% of Consolidated Edison shares are held by institutional investors. Comparatively, 69.9% of Alliant Energy shares are held by institutional investors. 0.2% of Consolidated Edison shares are held by company insiders. Comparatively, 0.3% of Alliant Energy shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Summary

Alliant Energy beats Consolidated Edison on 11 of the 17 factors compared between the two stocks.

About Consolidated Edison

Consolidated Edison, Inc. (Con Edison) is a holding company. The Company operates through its subsidiaries, which include Consolidated Edison Company of New York, Inc. (CECONY), Orange and Rockland Utilities, Inc. (O&R), Con Edison Clean Energy Businesses, Inc. (the Clean Energy Businesses) and Con Edison Transmission, Inc. (Con Edison Transmission). CECONY’s principal business operations are its regulated electric, gas and steam delivery businesses. CECONY provides electricity, natural gas and steam to customers in New York City and Westchester County. O&R’s principal business operations are its regulated electric and gas delivery businesses. The Clean Energy Businesses develop, own and operate renewable and energy infrastructure projects and provide energy-related products and services to wholesale and retail customers. Con Edison Transmission, through its subsidiaries, invests in electric transmission facilities and gas pipeline and storage facilities.

About Alliant Energy

Alliant Energy Corporation operates as a regulated investor-owned public utility holding company. The Company’s segments include Utility and Non-regulated, Parent and Other. The Utility segment includes the operations of Interstate Power and Light Company (IPL) and Wisconsin Power and Light Company (WPL), which serve retail customers in Iowa and Wisconsin. The Utility segment includes utility electric operations, utility gas operations and utility other, which includes steam operations and the unallocated portions of the utility business. Its Non-regulated, Parent and Other segment includes the operations of Alliant Energy Resources, LLC and its subsidiaries; Alliant Energy Corporate Services, Inc. (Corporate Services); the Alliant Energy parent company, and any Alliant Energy parent company consolidating adjustments. IPL and WPL own a portfolio of electric generating units located in Iowa, Wisconsin and Minnesota with a fuel mix, including coal, natural gas and renewable resources.

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