Critical Comparison: Hydro One (OTCMKTS:HRNNF) versus TXNM Energy (NYSE:TXNM)

TXNM Energy (NYSE:TXNM) and Hydro One (OTCMKTS:HRNNF) are both utilities companies, but which is the superior investment? We will compare the two companies based on the strength of their dividends, valuation, earnings, institutional ownership, analyst recommendations, risk and profitability.

Profitability

This table compares TXNM Energy and Hydro One’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
TXNM Energy	9.04%	8.11%	2.34%
Hydro One	14.88%	11.02%	3.56%

Dividends

TXNM Energy pays an annual dividend of $1.69 per share and has a dividend yield of 2.9%. Hydro One pays an annual dividend of $1.02 per share and has a dividend yield of 2.8%. TXNM Energy pays out 93.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Hydro One pays out 59.6% of its earnings in the form of a dividend.

Analyst Recommendations

This is a summary of recent recommendations for TXNM Energy and Hydro One, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
TXNM Energy	0	3	0	0	2.00
Hydro One	1	5	1	0	2.00

TXNM Energy currently has a consensus price target of $61.25, indicating a potential upside of 4.82%. Given TXNM Energy’s higher possible upside, research analysts plainly believe TXNM Energy is more favorable than Hydro One.

Institutional & Insider Ownership

91.7% of TXNM Energy shares are held by institutional investors. 1.1% of TXNM Energy shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Valuation & Earnings

This table compares TXNM Energy and Hydro One”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
TXNM Energy	$2.17 billion	2.97	$151.89 million	$1.81	32.28
Hydro One	$6.47 billion	3.42	$958.32 million	$1.71	21.58

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

Summary

Hydro One beats TXNM Energy on 8 of the 14 factors compared between the two stocks.

About TXNM Energy

TXNM Energy, Inc., through its subsidiaries, provides electricity and electric services in the United States. It operates through Public Service Company of New Mexico (PNM) and Texas-New Mexico Power Company (TNMP) segments. The PNM segment engages in the generation, transmission, and distribution of electricity. The segment owns and leases communications, office and other equipment, office space, vehicles, and real estate. It generates electricity using coal, natural gas and oil, and nuclear fuel and waste, as well as solar, wind, geothermal, and battery storage energy sources. The TNMP segment provides regulated transmission and distribution services. The segment also owns and leases vehicles, service facilities, and office locations throughout its service territory. The company serves residential, commercial, and industrial customers and end-users of electricity in New Mexico and Texas. The company was formerly known as PNM Resources, Inc and changed its name to TXNM Energy, Inc. in August 2024. TXNM Energy, Inc. was founded in 1882 and is based in Albuquerque, New Mexico.

About Hydro One

Hydro One Limited, through its subsidiaries, operates as an electricity transmission and distribution company in Ontario. The company operates through three segments: Transmission, Distribution, and Other. It owns and operates approximately 30,000 circuit kilometers of high-voltage transmission lines and approximately 125,000 circuit kilometers primary low-voltage distribution lines. The company serves residential, small business, commercial, and industrial customers, as well as municipal utilities. It also provides telecommunications support services for its transmission and distribution businesses; and information and communications technology services and solutions. The company was incorporated in 2015 and is headquartered in Toronto, Canada.