Financial Survey: Avista (AVA) & Alliant Energy (LNT)

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

Institutional and Insider Ownership

80.4% of Avista shares are held by institutional investors. Comparatively, 71.4% of Alliant Energy shares are held by institutional investors. 1.1% of Avista shares are held by insiders. Comparatively, 0.3% of Alliant Energy shares are held 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.

Profitability

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

Net Margins Return on Equity Return on Assets
Avista 8.31% 7.38% 2.34%
Alliant Energy 15.09% 11.69% 3.48%

Volatility & Risk

Avista has a beta of 0.15, meaning that its share price is 85% less volatile than the S&P 500. Comparatively, Alliant Energy has a beta of 0.18, meaning that its share price is 82% less volatile than the S&P 500.

Analyst Recommendations

This is a summary of recent recommendations and price targets for Avista and Alliant Energy, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Avista 1 0 0 0 1.00
Alliant Energy 2 5 0 0 1.71

Avista presently has a consensus price target of $40.00, indicating a potential downside of 22.16%. Alliant Energy has a consensus price target of $44.90, indicating a potential downside of 2.75%. Given Alliant Energy’s stronger consensus rating and higher probable upside, analysts clearly believe Alliant Energy is more favorable than Avista.

Dividends

Avista pays an annual dividend of $1.49 per share and has a dividend yield of 2.9%. Alliant Energy pays an annual dividend of $1.34 per share and has a dividend yield of 2.9%. 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. Alliant Energy pays out 69.4% of its earnings in the form of a dividend. Avista has raised its dividend for 15 consecutive years and Alliant Energy has raised its dividend for 12 consecutive years. Alliant Energy is clearly the better dividend stock, given its higher yield and lower payout ratio.

Valuation & Earnings

This table compares Avista and Alliant Energy’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Avista $1.45 billion 2.33 $115.91 million $1.95 26.35
Alliant Energy $3.38 billion 3.22 $467.50 million $1.93 23.92

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

Summary

Alliant Energy beats Avista on 11 of the 16 factors compared between the two stocks.

Avista Company Profile

Avista Corporation operates as an electric and natural gas utility company. It operates through two segments, Avista Utilities and AEL&P. The Avista Utilities segment provides electric distribution and transmission, and natural gas distribution services in parts of eastern Washington and northern Idaho; and natural gas distribution services in parts of northeastern and southwestern Oregon, as well as generates electricity in Washington, Idaho, Oregon, and Montana. This segment also engages in the wholesale purchase and sale of electricity and natural gas. The AEL&P segment offers electric services to approximately 17,000 customers in the city and borough of Juneau, Alaska. The company generates electricity through hydro, thermal, and wind facilities. As of February 21, 2018, it supplied retail electric services to approximately 382,000 customers and retail natural gas service to approximately 347,000 customers. In addition, the company engages in sheet metal fabrication, venture fund investments, real estate investments, and other investments. Avista Corporation was founded in 1889 and is headquartered in Spokane, Washington.

Alliant Energy Company Profile

Alliant Energy Corporation operates as a utility holding company that provides regulated electricity and natural gas services in the Midwest region of the United States. It operates through three segments: Electric, Gas, and Other. The company, through its subsidiary, Interstate Power and Light Company (IPL), primarily generates and distributes electricity, and distributes and transports natural gas to retail customers in Iowa; sells electricity to wholesale customers in Minnesota, Illinois, and Iowa; and generates and distributes steam in Cedar Rapids, Iowa. Alliant Energy Corporation, through its subsidiary, Wisconsin Power and Light Company (WPL), generates and distributes electricity, and distributes and transports natural gas to retail customers in Wisconsin; and sells electricity to wholesale customers in Wisconsin. As of December 31, 2017, IPL supplied electricity to 490,000 retail customers and natural gas to 220,000 retail customers; and WPL supplied electricity to 470,000 retail customers and natural gas to 190,000 retail customers. It offers electric utility services to retail customers in the farming, agriculture, industrial manufacturing, chemical, and paper industries. In addition, the company holds investments in various businesses, which provide freight services through a short-line railway between Cedar Rapids and Iowa City, Iowa; a barge terminal and hauling services on the Mississippi River; and other transfer and storage services. Further, it owns a non-regulated 347 megawatt (MW) natural gas-fired electric generating unit near Sheboygan Falls, Wisconsin; and a non-regulated 99 MW Franklin County wind farm located in Franklin County, Iowa. Alliant Energy Corporation was founded in 1917 and is headquartered in Madison, Wisconsin.

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