Fortis (NYSE:FTS) versus Ameren (NYSE:AEE) Head-To-Head Review

Fortis (NYSE:FTS) and Ameren (NYSE:AEE) are both large-cap utilities companies, but which is the superior stock? We will compare the two businesses based on the strength of their institutional ownership, analyst recommendations, dividends, profitability, earnings, valuation and risk.

Earnings and Valuation

This table compares Fortis and Ameren”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Fortis	$12.35 billion	2.23	$1.29 billion	$2.47	21.59
Ameren	$8.80 billion	3.21	$1.46 billion	$5.68	17.97

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

Insider & Institutional Ownership

57.8% of Fortis shares are owned by institutional investors. Comparatively, 79.1% of Ameren shares are owned by institutional investors. 0.3% of Ameren shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Dividends

Fortis pays an annual dividend of $1.82 per share and has a dividend yield of 3.4%. Ameren pays an annual dividend of $3.00 per share and has a dividend yield of 2.9%. Fortis pays out 73.7% of its earnings in the form of a dividend. Ameren pays out 52.8% 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. Fortis has raised its dividend for 5 consecutive years and Ameren has raised its dividend for 12 consecutive years.

Analyst Recommendations

This is a summary of recent recommendations for Fortis and Ameren, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Fortis	0	5	3	0	2.38
Ameren	0	4	10	0	2.71

Fortis currently has a consensus price target of $65.00, suggesting a potential upside of 21.92%. Ameren has a consensus price target of $118.08, suggesting a potential upside of 15.66%. Given Fortis’ higher probable upside, analysts clearly believe Fortis is more favorable than Ameren.

Profitability

This table compares Fortis and Ameren’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Fortis	14.17%	7.16%	2.34%
Ameren	17.86%	10.95%	3.00%

Risk & Volatility

Fortis has a beta of 0.42, meaning that its stock price is 58% less volatile than the S&P 500. Comparatively, Ameren has a beta of 0.44, meaning that its stock price is 56% less volatile than the S&P 500.

Summary

Ameren beats Fortis on 13 of the 17 factors compared between the two stocks.

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.

About Ameren

Ameren Corporation, together with its subsidiaries, operates as a public utility holding company in the United States. The company operates through four segments: Ameren Missouri, Ameren Illinois Electric Distribution, Ameren Illinois Natural Gas, and Ameren Transmission. It engages in the rate-regulated electric generation, transmission, and distribution activities; and rate-regulated natural gas distribution business. In addition, the company generates electricity through coal, nuclear, and natural gas, as well as renewable sources, such as hydroelectric, wind, methane gas, and solar. It serves residential, commercial, and industrial customers. The company was founded in 1881 and is headquartered in Saint Louis, Missouri.