Head to Head Analysis: Consolidated Edison (ED) & Avista (AVA)

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

Profitability

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This table compares Consolidated Edison and Avista’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%
Avista 8.02% 7.72% 2.41%

Valuation & Earnings

This table compares Consolidated Edison and Avista’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Consolidated Edison $12.03 billion 2.00 $1.53 billion $4.09 18.95
Avista $1.45 billion 2.34 $115.91 million $1.95 26.48

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

Dividends

Consolidated Edison pays an annual dividend of $2.86 per share and has a dividend yield of 3.7%. Avista pays an annual dividend of $1.49 per share and has a dividend yield of 2.9%. Consolidated Edison pays out 69.9% of its earnings in the form of a dividend. Avista pays out 76.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Consolidated Edison has raised its dividend for 43 consecutive years and Avista has raised its dividend for 15 consecutive years. Consolidated Edison is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Recommendations

This is a summary of current ratings and target prices for Consolidated Edison and Avista, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Consolidated Edison 4 5 1 0 1.70
Avista 1 2 0 0 1.67

Consolidated Edison currently has a consensus target price of $80.61, indicating a potential upside of 4.00%. Avista has a consensus target price of $46.50, indicating a potential downside of 9.95%. Given Consolidated Edison’s stronger consensus rating and higher probable upside, equities research analysts clearly believe Consolidated Edison is more favorable than Avista.

Institutional and Insider Ownership

56.7% of Consolidated Edison shares are held by institutional investors. Comparatively, 81.2% of Avista shares are held by institutional investors. 0.2% of Consolidated Edison shares are held by company insiders. Comparatively, 1.1% of Avista shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Risk and Volatility

Consolidated Edison has a beta of 0.05, suggesting that its share price is 95% less volatile than the S&P 500. Comparatively, Avista has a beta of 0.3, suggesting that its share price is 70% less volatile than the S&P 500.

Summary

Consolidated Edison beats Avista on 12 of the 17 factors compared between the two stocks.

Consolidated Edison Company Profile

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.

Avista Company Profile

Avista Corporation is an electric and natural gas utility company. The Company operates through two segments: Avista Utilities, and Alaska Electric Light and Power Company (AEL&P). The Company’s regional services include government and higher education, medical services, retail trade and finance. The Company’s businesses also include sheet metal fabrication, venture fund investments, real estate investments, a company that explores markets that could be served with liquefied natural gas (LNG), as well as certain other investments of Avista Capital, which is a subsidiary of the Company. Avista Utilities is an operating division of the Company, which consists of its regulated utility operations in the Pacific Northwest. Avista Utilities division generates, transmits and distributes electricity, and distributes natural gas. As of December 31, 2016, AEL&P operated five hydroelectric generation facilities with 102.7 megawatts (MW) of hydroelectric generation capacity.

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