Fortis (NYSE:FTS) and Alliant Energy (NASDAQ:LNT) Critical Review

Alliant Energy (NASDAQ:LNT) and Fortis (NYSE:FTS) are both large-cap utilities companies, but which is the better investment? We will contrast the two companies based on the strength of their institutional ownership, valuation, earnings, analyst recommendations, profitability, risk and dividends.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Alliant Energy	18.45%	11.16%	3.31%
Fortis	14.17%	7.16%	2.34%

Insider and Institutional Ownership

79.9% of Alliant Energy shares are owned by institutional investors. Comparatively, 57.8% of Fortis shares are owned by institutional investors. 0.3% of Alliant Energy shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Analyst Recommendations

This is a summary of current ratings and recommmendations for Alliant Energy and Fortis, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Alliant Energy	0	5	9	0	2.64
Fortis	0	5	3	0	2.38

Alliant Energy presently has a consensus target price of $77.00, indicating a potential upside of 13.37%. Fortis has a consensus target price of $66.33, indicating a potential upside of 20.67%. Given Fortis’ higher probable upside, analysts clearly believe Fortis is more favorable than Alliant Energy.

Risk & Volatility

Alliant Energy has a beta of 0.54, indicating that its stock price is 46% less volatile than the S&P 500. Comparatively, Fortis has a beta of 0.42, indicating that its stock price is 58% less volatile than the S&P 500.

Earnings & Valuation

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Alliant Energy	$4.36 billion	4.04	$810.00 million	$3.16	21.49
Fortis	$8.71 billion	3.22	$1.29 billion	$2.47	22.26

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

Dividends

Alliant Energy pays an annual dividend of $2.14 per share and has a dividend yield of 3.2%. Fortis pays an annual dividend of $1.82 per share and has a dividend yield of 3.3%. Alliant Energy pays out 67.7% of its earnings in the form of a dividend. Fortis pays out 73.7% 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. Alliant Energy has raised its dividend for 22 consecutive years and Fortis has raised its dividend for 5 consecutive years.

Summary

Alliant Energy beats Fortis on 12 of the 17 factors compared between the two stocks.

About Alliant Energy

Alliant Energy Corporation operates as a utility holding company that provides regulated electricity and natural gas services in the United States. It operates in three segments: Utility Electric Operations, Utility Gas Operations, and Utility 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 other 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. It serves retail customers in the farming, agriculture, industrial manufacturing, chemical, packaging, and food industries, as well as wholesale customers comprising municipalities and rural electric cooperatives. In addition, the company owns and operates a short-line rail freight service in Iowa; a Mississippi River barge, rail, and truck freight terminal in Illinois; freight brokerage services; wind turbine blade recycling services; and a rail-served warehouse in Iowa. Further, it holds interests in a natural gas-fired electric generating unit near Sheboygan Falls, Wisconsin; and a wind farm located in Oklahoma. The company was formerly known as Interstate Energy Corp. and changed its name to Alliant Energy Corporation in May 1999. Alliant Energy Corporation was incorporated in 1981 and is headquartered in Madison, Wisconsin.

About Fortis

Fortis Inc. operates as an electric and gas utility company in Canada, the United States, and the Caribbean countries. It generates, transmits, and distributes electricity to approximately 447,000 retail customers in southeastern Arizona; and 103,000 retail customers in Arizona's Mohave and Santa Cruz counties with an aggregate capacity of 3,408 megawatts (MW), including 68 MW of solar capacity and 250 MV of wind capacity. The company also sells wholesale electricity to other entities in the western United States; owns gas-fired and hydroelectric generating capacity totaling 65 MW; and distributes natural gas to approximately 1,087,000 residential, commercial, and industrial customers in British Columbia, Canada. In addition, it owns and operates the electricity distribution system that serves approximately 592,000 customers in southern and central Alberta; owns four hydroelectric generating facilities with a combined capacity of 225 MW; and provides operation, maintenance, and management services to five hydroelectric generating facilities. Further, the company distributes electricity in the island portion of Newfoundland and Labrador with an installed generating capacity of 145 MW; and on Prince Edward Island with a generating capacity of 90 MW. Additionally, it provides integrated electric utility service to approximately 69,000 customers in Ontario; approximately 275,000 customers in Newfoundland and Labrador; approximately 34,000 customers on Grand Cayman, Cayman Islands; and approximately 17,000 customers on certain islands in Turks and Caicos. It also holds long-term contracted generation assets in Belize consisting of 3 hydroelectric generating facilities with a combined capacity of 51 MW; and the Aitken Creek natural gas storage facility. It also owns and operates approximately 90,500 circuit Kilometers (km) of distribution lines; and approximately 51,600 km of natural gas pipelines. Fortis Inc. was founded in 1885 and is headquartered in St. John's, Canada.