Head to Head Contrast: CEMIG (CIG) and Pampa Energia (PAM)

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CEMIG (NYSE: PAM) and Pampa Energia (NYSE:PAM) are both mid-cap utilities companies, but which is the superior investment? We will contrast the two businesses based on the strength of their risk, institutional ownership, profitability, dividends, valuation, analyst recommendations and earnings.

Profitability

This table compares CEMIG and Pampa Energia’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
CEMIG 4.27% 6.47% 2.21%
Pampa Energia 5.30% 8.21% 1.43%

Insider & Institutional Ownership

2.4% of CEMIG shares are owned by institutional investors. Comparatively, 36.1% of Pampa Energia shares are owned by institutional investors. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Dividends

CEMIG pays an annual dividend of $0.13 per share and has a dividend yield of 8.1%. Pampa Energia does not pay a dividend. CEMIG pays out 50.0% of its earnings in the form of a dividend.

Earnings and Valuation

This table compares CEMIG and Pampa Energia’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
CEMIG $6.80 billion 0.30 $313.51 million $0.26 6.15
Pampa Energia $3.05 billion 0.70 $342.46 million $3.55 8.23

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

Risk & Volatility

CEMIG has a beta of 1.69, suggesting that its stock price is 69% more volatile than the S&P 500. Comparatively, Pampa Energia has a beta of 1.22, suggesting that its stock price is 22% more volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent ratings and price targets for CEMIG and Pampa Energia, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
CEMIG 0 1 1 0 2.50
Pampa Energia 1 0 5 0 2.67

Pampa Energia has a consensus price target of $57.25, suggesting a potential upside of 96.06%. Given Pampa Energia’s stronger consensus rating and higher possible upside, analysts plainly believe Pampa Energia is more favorable than CEMIG.

Summary

Pampa Energia beats CEMIG on 11 of the 15 factors compared between the two stocks.

About CEMIG

Companhia Energética de Minas Gerais, through its subsidiaries, engages in the generation, transmission, distribution, and sale of electricity in Brazil. The company generates electricity through renewable energy sources, such as water, wind, sun, and biomass; or non-renewable sources, including fossil and nuclear fuels. As of December 31, 2016, it operated hydroelectric plants, thermoelectric plants, and solar plants with a total installed capacity of approximately 8,000 megawatts in 10 states of Brazil. It is also involved in the telecommunications and energy solutions consulting businesses; exploitation of natural gas; sale and trading of electricity; and acquisition, transport, and distribution of gas and its subproducts and derivatives, as well as provision of technology systems and systems for operational management of public service concessions, including companies operating in electricity, gas, water and sewerage, and other utility companies. The company was founded in 1952 and is headquartered in Belo Horizonte, Brazil.

About Pampa Energia

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, and hydroelectric power generation systems, as well as through a wind farm. As of December 31, 2017, it had an electricity generation installed capacity of approximately 3,756 megawatts; 3 million electricity distribution customers in the northern region of the City of Buenos Aires and northwest of the greater Buenos Aires area; and 20,718 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 Ecuador. 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, 2017, the company had combined crude oil and natural gas proved reserves of approximately 167.1 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 1.2 million barrels; one lubricant plant; and three fully-owned petrochemical plants. It also operated a network of 250 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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