Contrasting Exelon (EXC) & NiSource (NI)

Exelon (NYSE: EXC) and NiSource (NYSE:NI) are both utilities companies, but which is the superior business? We will compare the two businesses based on the strength of their valuation, institutional ownership, dividends, risk, earnings, analyst recommendations and profitability.

Profitability

This table compares Exelon and NiSource’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Exelon 10.06% 9.17% 2.43%
NiSource 3.85% 9.85% 2.18%

Insider & Institutional Ownership

78.1% of Exelon shares are owned by institutional investors. Comparatively, 89.2% of NiSource shares are owned by institutional investors. 0.5% of Exelon shares are owned by insiders. Comparatively, 0.4% of NiSource shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Valuation and Earnings

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

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Exelon $33.53 billion 1.17 $3.77 billion $2.60 15.69
NiSource $4.87 billion 1.65 $128.50 million $1.21 19.72

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

Analyst Ratings

This is a summary of recent ratings for Exelon and NiSource, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Exelon 0 3 11 0 2.79
NiSource 0 2 8 0 2.80

Exelon currently has a consensus target price of $42.69, indicating a potential upside of 4.64%. NiSource has a consensus target price of $26.44, indicating a potential upside of 10.83%. Given NiSource’s stronger consensus rating and higher probable upside, analysts clearly believe NiSource is more favorable than Exelon.

Dividends

Exelon pays an annual dividend of $1.38 per share and has a dividend yield of 3.4%. NiSource pays an annual dividend of $0.78 per share and has a dividend yield of 3.3%. Exelon pays out 53.1% of its earnings in the form of a dividend. NiSource pays out 64.5% 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. Exelon has raised its dividend for 2 consecutive years. Exelon is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Risk and Volatility

Exelon has a beta of 0.2, meaning that its stock price is 80% less volatile than the S&P 500. Comparatively, NiSource has a beta of 0.28, meaning that its stock price is 72% less volatile than the S&P 500.

Summary

Exelon beats NiSource on 10 of the 17 factors compared between the two stocks.

Exelon Company Profile

Exelon Corporation, a utility services holding company, engages in energy generation and delivery businesses in the United States and Canada. The company owns electric generating facilities, such as nuclear, fossil, wind, hydroelectric, and solar generating facilities. It also sells electricity to wholesale and retail customers; and sells natural gas, renewable energy, and other energy-related products and services. In addition, it is involved in the purchase and regulated retail sale of electricity; and the transmission and distribution of electricity to retail customers in Northern Illinois, Southeastern Pennsylvania, Central Maryland, Delaware, and Southern New Jersey. Further, the company engages in the purchase and regulated retail sale of natural gas, and the distribution of natural gas to retail customers in Pennsylvania counties surrounding the City of Philadelphia, Central Maryland, and Delaware. Additionally, it offers support services, including corporate strategy and development, legal, human resources, information technology, finance, real estate, security, corporate communications, supply at cost, engineering, distribution and transmission planning, asset management, system operations, and power procurement services. The company serves distribution utilities, municipalities, cooperatives, and financial institutions, as well as commercial, industrial, governmental, and residential customers. Exelon Corporation was incorporated in 1999 and is headquartered in Chicago, Illinois.

NiSource Company Profile

NiSource Inc., an energy holding company, operates as a regulated natural gas and electric utility company in the United States. The company operates in two segments, Gas Distribution Operations and Electric Operations. It provides natural gas service and transportation to residential, commercial, and industrial customers; generates, transmits, and distributes electricity; and offers wholesale and transmission transaction services. The company serves approximately 3.5 million natural gas customers and 469,000 electricity customers in Ohio, Pennsylvania, Virginia, Kentucky, Maryland, Indiana, and Massachusetts. It also owns and operates three coal-fired electric generating stations with a net capability of 2,540 megawatts (MW), three gas-fired generating units with a net capability of 196 MW, and two hydroelectric generating plants with a net capability of 10 MW, as well as a combined cycle gas turbine plant with a net capability of 535 MW. The company was formerly known as NIPSCO Industries, Inc. and changed its name to NiSource Inc. in April 1999. NiSource Inc. was founded in 1912 and is headquartered in Merrillville, Indiana.

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