Reviewing Houston Lighting & Power (CNP) and Pampa Energia (PAM)

Houston Lighting & Power (NYSE: CNP) and Pampa Energia (NYSE:PAM) are both utilities companies, but which is the better business? We will compare the two companies based on the strength of their dividends, risk, institutional ownership, profitability, valuation, earnings and analyst recommendations.

Profitability

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This table compares Houston Lighting & Power and Pampa Energia’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Houston Lighting & Power 18.64% 15.51% 2.69%
Pampa Energia 7.27% 27.25% 5.19%

Insider and Institutional Ownership

76.7% of Houston Lighting & Power shares are owned by institutional investors. Comparatively, 44.2% of Pampa Energia shares are owned by institutional investors. 0.2% of Houston Lighting & Power shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Analyst Recommendations

This is a summary of recent ratings for Houston Lighting & Power and Pampa Energia, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Houston Lighting & Power 1 6 0 0 1.86
Pampa Energia 0 0 3 0 3.00

Houston Lighting & Power currently has a consensus target price of $28.43, indicating a potential upside of 4.83%. Pampa Energia has a consensus target price of $72.00, indicating a potential upside of 23.31%. Given Pampa Energia’s stronger consensus rating and higher possible upside, analysts plainly believe Pampa Energia is more favorable than Houston Lighting & Power.

Valuation and Earnings

This table compares Houston Lighting & Power and Pampa Energia’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Houston Lighting & Power $9.61 billion 1.22 $1.79 billion $1.37 19.80
Pampa Energia $3.05 billion 1.41 $278.20 million $3.55 16.45

Houston Lighting & Power has higher revenue and earnings than Pampa Energia. Pampa Energia is trading at a lower price-to-earnings ratio than Houston Lighting & Power, indicating that it is currently the more affordable of the two stocks.

Volatility & Risk

Houston Lighting & Power has a beta of 0.49, indicating that its share price is 51% less volatile than the S&P 500. Comparatively, Pampa Energia has a beta of 1.13, indicating that its share price is 13% more volatile than the S&P 500.

Dividends

Houston Lighting & Power pays an annual dividend of $1.11 per share and has a dividend yield of 4.1%. Pampa Energia does not pay a dividend. Houston Lighting & Power pays out 81.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Houston Lighting & Power has increased its dividend for 12 consecutive years.

Summary

Pampa Energia beats Houston Lighting & Power on 9 of the 17 factors compared between the two stocks.

Houston Lighting & Power Company Profile

CenterPoint Energy, Inc. operates as a public utility holding company in the United States. The company's Electric Transmission & Distribution segment offers electric transmission and distribution services to retail electric providers, municipalities, electric cooperatives, and other distribution companies. As of December 31, 2017, this segment owned 28,883 pole miles of overhead distribution lines and 24,662 circuit miles of underground distribution lines; and 235 substations with a transformer capacity of 64,924 megavolt amperes, as well as operated 14 regional service centers. Its Natural Gas Distribution segment sells regulated intrastate natural gas; provides natural gas transportation and storage services for residential, commercial, industrial, and transportation customers; and offers unregulated services comprising residential appliance repair and maintenance services. As of December 31, 2017, this segment owned approximately 75,000 linear miles of natural gas distribution mains. The company's Energy Services segment provides physical natural gas supplies primarily to commercial and industrial customers, and electric and natural gas utilities; natural gas management services; and physical delivery services, as well as procures and optimizes transportation and storage assets. This segment owns and operates approximately 200 miles of intrastate pipelines; and leases transportation capacity on various interstate and intrastate pipelines, and storage. Its Midstream Investments segment offers natural gas and crude oil gathering, and natural gas processing services to its producer customers; and interstate and intrastate natural gas pipeline transportation and storage services to its producer, power plant, local distribution company, and industrial end-user customers. The company was founded in 1882 and is based in Houston, Texas.

Pampa Energia Company Profile

Pampa Energía S.A., an integrated electricity company, through its subsidiaries, engages in the generation, transmission, and distribution of electricity in Argentina. The company generates electricity through combined cycle gas-fired generating units, thermal generation plants, open-cycle gas turbines, combined gas and fuel oil turbines, and hydroelectric power generation systems, as well as through a wind farm. As of December 31, 2016, it had an electricity generation installed capacity of approximately 3,433 megawatts; 2.9 million electricity distribution customers in the northern region of the City of Buenos Aires and northwest of the greater Buenos Aires area; and 20,648 kilometers of high voltage transmission lines. The company is also involved in the exploration and production, and refining and distribution of oil and gas in Argentina, Venezuela, and Ecuado. In addition, it offers petrochemicals, such as intermediate gasoline products, aromatic solvents, hexane and other hydrogenated paraffinic solvents, and propellants for the cosmetic industry; and monomer styrene, and rubber and polymer products from natural gas, virgin naphtha, propane, and other supplies. As of December 31, 2016, the company had combined crude oil and natural gas proved reserves of approximately 143.9 million barrels of oil equivalent; one fully owned refinery with an installed capacity of approximately 30.2 thousand barrels per day; two storage plants with a capacity of approximately 1.3 million barrels; one lubricant plant; and three fully-owned petrochemical plants. It also operated a network of 263 gas stations. The company was formerly known as Pampa Holding S.A. and changed its name to Pampa Energía S.A. in September 2008. Pampa Energía S.A. was founded in 1945 and is headquartered in Buenos Aires, Argentina.

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