Xcel Energy (NASDAQ:XEL – Get Free Report) and CenterPoint Energy (NYSE:CNP – Get Free Report) are both large-cap utilities companies, but which is the better investment? We will compare the two businesses based on the strength of their earnings, risk, analyst recommendations, institutional ownership, dividends, valuation and profitability.
Insider and Institutional Ownership
78.4% of Xcel Energy shares are held by institutional investors. Comparatively, 91.8% of CenterPoint Energy shares are held by institutional investors. 0.1% of Xcel Energy shares are held by insiders. Comparatively, 0.1% of CenterPoint 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.
Dividends
Xcel Energy pays an annual dividend of $2.28 per share and has a dividend yield of 2.9%. CenterPoint Energy pays an annual dividend of $0.88 per share and has a dividend yield of 2.1%. Xcel Energy pays out 66.7% of its earnings in the form of a dividend. CenterPoint Energy pays out 55.7% 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. Xcel Energy has raised its dividend for 22 consecutive years and CenterPoint Energy has raised its dividend for 5 consecutive years. Xcel Energy is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Analyst Recommendations
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Xcel Energy | 1 | 1 | 12 | 3 | 3.00 |
| CenterPoint Energy | 1 | 5 | 7 | 0 | 2.46 |
Xcel Energy presently has a consensus price target of $87.60, indicating a potential upside of 10.91%. CenterPoint Energy has a consensus price target of $41.82, indicating a potential upside of 0.39%. Given Xcel Energy’s stronger consensus rating and higher probable upside, analysts clearly believe Xcel Energy is more favorable than CenterPoint Energy.
Profitability
This table compares Xcel Energy and CenterPoint Energy’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Xcel Energy | 13.76% | 10.83% | 2.95% |
| CenterPoint Energy | 11.37% | 10.25% | 2.52% |
Volatility & Risk
Xcel Energy has a beta of 0.46, meaning that its share price is 54% less volatile than the S&P 500. Comparatively, CenterPoint Energy has a beta of 0.59, meaning that its share price is 41% less volatile than the S&P 500.
Earnings & Valuation
This table compares Xcel Energy and CenterPoint Energy”s revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Xcel Energy | $14.67 billion | 3.18 | $2.02 billion | $3.42 | 23.09 |
| CenterPoint Energy | $8.64 billion | 3.15 | $1.02 billion | $1.58 | 26.36 |
Xcel Energy has higher revenue and earnings than CenterPoint Energy. Xcel Energy is trading at a lower price-to-earnings ratio than CenterPoint Energy, indicating that it is currently the more affordable of the two stocks.
Summary
Xcel Energy beats CenterPoint Energy on 13 of the 18 factors compared between the two stocks.
About Xcel Energy
Xcel Energy Inc., through its subsidiaries, engages in the generation, purchasing, transmission, distribution, and sale of electricity. It operates through Regulated Electric Utility, Regulated Natural Gas Utility, and All Other segments. The company generates electricity through wind, nuclear, hydroelectric, biomass, and solar energy sources, as well as coal, natural gas, oil, wood, and refuse-derived fuels. It also purchases, transports, distributes, and sells natural gas to retail customers, as well as transports customer-owned natural gas. In addition, the company develops and leases natural gas pipelines, and storage and compression facilities; and invests in rental housing projects and nonregulated assets, as well as procures equipment for the construction of renewable generation facilities. It serves residential, commercial, and industrial customers in the portions of Colorado, Michigan, Minnesota, New Mexico, North Dakota, South Dakota, Texas, and Wisconsin. The company was incorporated in 1909 and is headquartered in Minneapolis, Minnesota.
About CenterPoint Energy
CenterPoint Energy, Inc. operates as a public utility holding company in the United States. The company operates through two segments, Electric and Natural Gas. The Electric segment includes electric transmission and distribution services to electric customers and electric generation assets, as well as optimizes assets in the wholesale power market. The Natural Gas segment engages in the intrastate natural gas sales, and natural gas transportation and distribution for residential, commercial, industrial and institutional customers in Indiana, Louisiana, Minnesota, Mississippi, Ohio, and Texas; permanent pipeline connections through interconnects with various interstate and intrastate pipeline companies; and provides maintenance and repair services of home appliances to customers in Minnesota and home repair protection plans to natural gas customers in Indiana, Mississippi, Ohio, and Texas through a third party. It serves approximately 2,534,730 metered customers; owned 348 substations with transformer capacity of 79,719 megavolt amperes; and owned and operated 217 miles of intrastate pipeline in Louisiana and Texas. The company was founded in 1866 and is headquartered in Houston, Texas.
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