Financial Comparison: CenterPoint Energy (CNP) vs. Avista Corporation (AVA)

CenterPoint Energy (NYSE: CNP) and Avista Corporation (NYSE:AVA) are both mid-cap utilities companies, but which is the superior investment? We will contrast the two companies based on the strength of their valuation, dividends, profitabiliy, risk, earnings, analyst recommendations and institutional ownership.

Insider & Institutional Ownership

77.2% of CenterPoint Energy shares are owned by institutional investors. Comparatively, 69.1% of Avista Corporation shares are owned by institutional investors. 0.2% of CenterPoint Energy shares are owned by insiders. Comparatively, 1.1% of Avista Corporation shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Valuation and Earnings

This table compares CenterPoint Energy and Avista Corporation’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
CenterPoint Energy $8.28 billion 1.51 $2.08 billion $1.39 20.90
Avista Corporation $1.46 billion 2.31 $471.76 million $2.11 24.83

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

Profitability

This table compares CenterPoint Energy and Avista Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
CenterPoint Energy 6.86% 16.45% 2.65%
Avista Corporation 9.35% 8.19% 2.57%

Dividends

CenterPoint Energy pays an annual dividend of $1.07 per share and has a dividend yield of 3.7%. Avista Corporation pays an annual dividend of $1.43 per share and has a dividend yield of 2.7%. CenterPoint Energy pays out 77.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Avista Corporation pays out 67.8% of its earnings in the form of a dividend. CenterPoint Energy has increased its dividend for 11 consecutive years and Avista Corporation has increased its dividend for 14 consecutive years.

Analyst Recommendations

This is a breakdown of current recommendations and price targets for CenterPoint Energy and Avista Corporation, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
CenterPoint Energy 1 6 1 0 2.00
Avista Corporation 1 3 0 0 1.75

CenterPoint Energy currently has a consensus target price of $27.00, indicating a potential downside of 7.06%. Avista Corporation has a consensus target price of $44.00, indicating a potential downside of 16.01%. Given CenterPoint Energy’s stronger consensus rating and higher probable upside, analysts clearly believe CenterPoint Energy is more favorable than Avista Corporation.

Risk & Volatility

CenterPoint Energy has a beta of 0.64, suggesting that its stock price is 36% less volatile than the S&P 500. Comparatively, Avista Corporation has a beta of 0.42, suggesting that its stock price is 58% less volatile than the S&P 500.

Summary

CenterPoint Energy beats Avista Corporation on 11 of the 17 factors compared between the two stocks.

CenterPoint Energy Company Profile

CenterPoint Energy, Inc. is a public utility holding company. The Company, through its subsidiaries, owns and operates electric transmission and distribution facilities, and natural gas distribution facilities. The Electric Transmission & Distribution segment provides electric transmission and distribution services to retail electric providers. Its Natural Gas Distribution segment offers intrastate natural gas sales to and natural gas transportation and distribution for residential, commercial and industrial customers. Its Energy Services segment includes non-rate regulated gas sales and transportation and storage services for commercial and industrial customers. Its Midstream Investments segment includes equity investment in Enable that owns, operates and develops natural gas and crude oil assets. Its Other Operations segment includes office buildings and other real estate used in its business operations and other corporate operations.

Avista Corporation Company Profile

Avista Corporation is an electric and natural gas utility company. The Company operates through two segments: Avista Utilities, and Alaska Electric Light and Power Company (AEL&P). The Company’s regional services include government and higher education, medical services, retail trade and finance. The Company’s businesses also include sheet metal fabrication, venture fund investments, real estate investments, a company that explores markets that could be served with liquefied natural gas (LNG), as well as certain other investments of Avista Capital, which is a subsidiary of the Company. Avista Utilities is an operating division of the Company, which consists of its regulated utility operations in the Pacific Northwest. Avista Utilities division generates, transmits and distributes electricity, and distributes natural gas. As of December 31, 2016, AEL&P operated five hydroelectric generation facilities with 102.7 megawatts (MW) of hydroelectric generation capacity.

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