Reviewing CPFL Energia (CPL) and Pampa Energia (PAM)

CPFL Energia (NYSE:CPL) and Pampa Energia (NYSE:PAM) are both mid-cap utilities companies, but which is the better business? We will compare the two companies based on the strength of their profitability, valuation, dividends, earnings, analyst recommendations, institutional ownership and risk.

Insider and Institutional Ownership

36.6% of Pampa Energia shares are owned by institutional investors. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Profitability

This table compares CPFL Energia and Pampa Energia’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
CPFL Energia 6.60% 16.07% 4.49%
Pampa Energia -3.26% -29.17% -4.00%

Dividends

CPFL Energia pays an annual dividend of $0.13 per share and has a dividend yield of 0.8%. Pampa Energia does not pay a dividend. CPFL Energia has increased its dividend for 5 consecutive years.

Analyst Recommendations

This is a breakdown of current recommendations for CPFL Energia and Pampa Energia, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
CPFL Energia 1 0 0 0 1.00
Pampa Energia 0 0 5 0 3.00

Pampa Energia has a consensus price target of $54.00, suggesting a potential upside of 41.99%. Given Pampa Energia’s stronger consensus rating and higher probable upside, analysts clearly believe Pampa Energia is more favorable than CPFL Energia.

Valuation & Earnings

This table compares CPFL Energia and Pampa Energia’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
CPFL Energia $8.38 billion N/A $369.49 million N/A N/A
Pampa Energia $3.05 billion 0.92 $342.46 million $3.55 10.71

CPFL Energia has higher revenue and earnings than Pampa Energia.

Volatility & Risk

CPFL Energia has a beta of 0.75, indicating that its stock price is 25% less volatile than the S&P 500. Comparatively, Pampa Energia has a beta of 0.89, indicating that its stock price is 11% less volatile than the S&P 500.

Summary

CPFL Energia beats Pampa Energia on 8 of the 13 factors compared between the two stocks.

CPFL Energia Company Profile

CPFL Energia S.A., together with its subsidiaries, generates, transmits, distributes, and commercializes electricity to residential, industrial, and commercial customers in Brazil. The company generates electricity through wind, biomass-powered thermal, solar, and hydroelectric power plants. It also manufactures, commercializes, rents, and maintains electro-mechanical equipment; and offers administrative, call center, collection, IT, telecommunication, energy transmission, and energy efficiency management services, as well as maintenance services for energy generation companies. As of December 31, 2017, the company distributed electricity to approximately 9.4 million customers; and had 318,018 kilometers of distribution lines, which included 457,741 distribution transformers. It also has an installed capacity of 3,284 megawatts. CPFL Energia S.A. was founded in 1998 and is headquartered in Campinas, Brazil. CPFL Energia S.A. is a subsidiary of State Grid Brazil Power Participações Ltda.

Pampa Energia Company Profile

Pampa Energía S.A., an integrated electricity company, through its subsidiaries, engages in the generation, transmission, and distribution of electricity in Argentina. The company generates electricity through combined cycle gas-fired generating units, thermal generation plants, open-cycle gas turbines, and hydroelectric power generation systems, as well as through a wind farm. As of December 31, 2017, it had an electricity generation installed capacity of approximately 3,756 megawatts; 3 million electricity distribution customers in the northern region of the City of Buenos Aires and northwest of the greater Buenos Aires area; and 20,718 kilometers of high voltage transmission lines. The company is also involved in the exploration and production, and refining and distribution of oil and gas in Argentina, Venezuela, and Ecuador. In addition, it offers petrochemicals, such as intermediate gasoline products, aromatic solvents, hexane and other hydrogenated paraffinic solvents, and propellants for the cosmetic industry; and monomer styrene, and rubber and polymer products from natural gas, virgin naphtha, propane, and other supplies. As of December 31, 2017, the company had combined crude oil and natural gas proved reserves of approximately 167.1 million barrels of oil equivalent; one fully owned refinery with an installed capacity of approximately 30.2 thousand barrels per day; two storage plants with a capacity of approximately 1.2 million barrels; one lubricant plant; and three fully-owned petrochemical plants. It also operated a network of 250 gas stations. The company was formerly known as Pampa Holding S.A. and changed its name to Pampa Energía S.A. in September 2008. Pampa Energía S.A. was founded in 1945 and is headquartered in Buenos Aires, Argentina.

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