UIL (UIL) versus PG&E (PCG) Critical Analysis

UIL (NYSE: UIL) and PG&E (NYSE:PCG) are both utilities companies, but which is the superior investment? We will contrast the two companies based on the strength of their dividends, analyst recommendations, valuation, profitability, institutional ownership, risk and earnings.

Dividends

PG&E pays an annual dividend of $2.12 per share and has a dividend yield of 5.4%. UIL does not pay a dividend. PG&E pays out 66.0% of its earnings in the form of a dividend. UIL has raised its dividend for 2 consecutive years.

Earnings & Valuation

This table compares UIL and PG&E’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
UIL N/A N/A N/A $2.12 23.63
PG&E $17.14 billion 1.17 $1.66 billion $3.21 12.17

PG&E has higher revenue and earnings than UIL. PG&E is trading at a lower price-to-earnings ratio than UIL, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares UIL and PG&E’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
UIL 4.73% 4.50% 1.21%
PG&E 9.69% 10.00% 2.69%

Analyst Recommendations

This is a breakdown of current ratings for UIL and PG&E, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
UIL 0 0 0 0 N/A
PG&E 1 9 5 0 2.27

PG&E has a consensus target price of $59.28, indicating a potential upside of 51.68%. Given PG&E’s higher probable upside, analysts clearly believe PG&E is more favorable than UIL.

Insider and Institutional Ownership

78.5% of PG&E shares are owned by institutional investors. 0.2% of PG&E shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Summary

PG&E beats UIL on 10 of the 13 factors compared between the two stocks.

About UIL

UIL Holdings Corporation (UIL Holdings) is engaged in the ownership of its operating regulated utility businesses. The utility businesses consist of the electric distribution and transmission operations of The United Illuminating Company (UI) and the natural gas transportation, distribution and sales operations of The Southern Connecticut Gas Company (SCG), Connecticut Natural Gas Corporation (CNG) and The Berkshire Gas Company. The Company operates in two segments: Electric Distribution and Transmission, which is engaged in purchase, transmission, distribution and sale of electricity for residential, commercial and industrial purposes, and Gas Distribution, which is engaged in natural gas transportation, distribution and sales operations.

About PG&E

PG&E Corporation is a holding company. The Company’s primary operating subsidiary is Pacific Gas and Electric Company (the Utility), which operates in northern and central California. The Utility is engaged in the sale and delivery of electricity and natural gas to customers. The Utility generates electricity and provides electricity transmission and distribution services throughout its service territory in northern and central California to residential, commercial, industrial, and agricultural customers. The Utility provides bundled services (electricity, transmission and distribution services) to various customers in its service territory. As of December 31, 2016, the Utility owned approximately 18,400 circuit miles of interconnected transmission lines operating at voltages ranging from 60 kilovolt to 500 kilovolt. As of December 31, 2016, the Utility also operated 92 electric transmission substations with a capacity of approximately 64,600 megavolt ampere (MVA).

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