Head to Head Survey: National Grid Transco (NYSE:NGG) and American Electric Power (NASDAQ:AEP)

American Electric Power (NASDAQ:AEP) and National Grid Transco (NYSE:NGG) are both large-cap utilities companies, but which is the superior business? We will compare the two businesses based on the strength of their earnings, dividends, risk, institutional ownership, profitability, analyst recommendations and valuation.

Dividends

American Electric Power pays an annual dividend of $3.80 per share and has a dividend yield of 2.8%. National Grid Transco pays an annual dividend of $2.11 per share and has a dividend yield of 2.3%. American Electric Power pays out 56.7% of its earnings in the form of a dividend. American Electric Power has raised its dividend for 15 consecutive years. American Electric Power is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Volatility and Risk

American Electric Power has a beta of 0.61, suggesting that its share price is 39% less volatile than the S&P 500. Comparatively, National Grid Transco has a beta of 0.79, suggesting that its share price is 21% less volatile than the S&P 500.

Insider and Institutional Ownership

75.2% of American Electric Power shares are held by institutional investors. Comparatively, 4.7% of National Grid Transco shares are held by institutional investors. 0.1% of American Electric Power shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Valuation and Earnings

This table compares American Electric Power and National Grid Transco”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
American Electric Power	$21.88 billion	3.32	$3.58 billion	$6.70	19.94
National Grid Transco	$23.61 billion	3.82	$3.70 billion	N/A	N/A

National Grid Transco has higher revenue and earnings than American Electric Power.

Analyst Ratings

This is a summary of recent recommendations and price targets for American Electric Power and National Grid Transco, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
American Electric Power	0	9	13	0	2.59
National Grid Transco	1	5	4	0	2.30

American Electric Power presently has a consensus target price of $135.90, suggesting a potential upside of 1.72%. National Grid Transco has a consensus target price of $83.80, suggesting a potential downside of 7.78%. Given American Electric Power’s stronger consensus rating and higher possible upside, equities research analysts plainly believe American Electric Power is more favorable than National Grid Transco.

Profitability

This table compares American Electric Power and National Grid Transco’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
American Electric Power	16.37%	10.46%	2.92%
National Grid Transco	N/A	N/A	N/A

Summary

American Electric Power beats National Grid Transco on 10 of the 15 factors compared between the two stocks.

About American Electric Power

American Electric Power Company, Inc., an electric public utility holding company, engages in the generation, transmission, and distribution of electricity for sale to retail and wholesale customers in the United States. It operates through Vertically Integrated Utilities, Transmission and Distribution Utilities, AEP Transmission Holdco, and Generation & Marketing segments. The company generates electricity using coal and lignite, natural gas, renewable, nuclear, hydro, solar, wind, and other energy sources. It also supplies and markets electric power at wholesale to other electric utility companies, rural electric cooperatives, municipalities, and other market participants. American Electric Power Company, Inc. was incorporated in 1906 and is headquartered in Columbus, Ohio.

About National Grid Transco

National Grid plc transmits and distributes electricity and gas. It operates through UK Electricity Transmission, UK Electricity Distribution, UK Electricity System Operator, New England, New York, National Grid Ventures, and Other segments. The UK Electricity Transmission segment provides electricity transmission and construction work services in England and Wales. The UK Electricity Distribution segment offers electricity distribution services in Midlands, and South West of England and South Wales. The UK Electricity System Operator segment provides balancing services for supply and demand of electricity on Great Britain’s electricity transmission system; and acts as an agent on behalf of transmission operators. The New England segment offers electricity and gas distribution, and electricity transmission services in New England. The New York segment provides electricity and gas distribution, and electricity transmission services in New York. The National Grid Ventures segment provides transmission services through electricity interconnectors and LNG importation at the Isle of Grain, as well as sale of renewables projects. The Other segment engages in the leasing and sale of commercial property, as well as insurance activities in the United Kingdom. The company was founded in 1990 and is headquartered in London, the United Kingdom.