Sempra Energy (NYSE: SRE) and National Grid Transco, PLC (NYSE:NGG) are both large-cap utilities companies, but which is the better business? We will contrast the two businesses based on the strength of their earnings, risk, valuation, profitability, analyst recommendations, institutional ownership and dividends.
Institutional and Insider Ownership
81.2% of Sempra Energy shares are held by institutional investors. Comparatively, 5.4% of National Grid Transco, PLC shares are held by institutional investors. 0.2% of Sempra Energy shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.
This table compares Sempra Energy and National Grid Transco, PLC’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|National Grid Transco, PLC||N/A||N/A||N/A|
This is a breakdown of current ratings and target prices for Sempra Energy and National Grid Transco, PLC, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|National Grid Transco, PLC||2||5||7||0||2.36|
Sempra Energy presently has a consensus target price of $121.60, suggesting a potential upside of 2.75%. National Grid Transco, PLC has a consensus target price of $69.00, suggesting a potential upside of 7.33%. Given National Grid Transco, PLC’s higher possible upside, analysts plainly believe National Grid Transco, PLC is more favorable than Sempra Energy.
Valuation and Earnings
This table compares Sempra Energy and National Grid Transco, PLC’s gross revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Sempra Energy||$10.97 billion||2.71||$3.71 billion||$6.75||17.53|
|National Grid Transco, PLC||$19.34 billion||2.27||$6.55 billion||N/A||N/A|
National Grid Transco, PLC has higher revenue and earnings than Sempra Energy.
Sempra Energy pays an annual dividend of $3.29 per share and has a dividend yield of 2.8%. National Grid Transco, PLC pays an annual dividend of $2.89 per share and has a dividend yield of 4.5%. Sempra Energy pays out 48.7% of its earnings in the form of a dividend. National Grid Transco, PLC has increased its dividend for 6 consecutive years. National Grid Transco, PLC is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Risk and Volatility
Sempra Energy has a beta of 0.55, suggesting that its stock price is 45% less volatile than the S&P 500. Comparatively, National Grid Transco, PLC has a beta of 0.44, suggesting that its stock price is 56% less volatile than the S&P 500.
Sempra Energy beats National Grid Transco, PLC on 9 of the 16 factors compared between the two stocks.
Sempra Energy Company Profile
Sempra Energy is a holding company. The Company’s principal operating units are Sempra Utilities, which includes its San Diego Gas & Electric Company (SDG&E), Southern California Gas Company (SoCalGas) and Sempra South American Utilities segments, and Sempra Infrastructure, which includes its Sempra Mexico, Sempra Renewables and Sempra LNG & Midstream segments. As of December 31, 2016, SDG&E’s service area covered 4,100 square miles. Sempra South American Utilities operates Chilquinta Energia, which serves customers in the region of Valparaiso in central Chile. As of December 31, 2016, SoCalGas had natural gas franchises with the 12 counties and the 223 cities in its service territory. Sempra LNG & Midstream owns land in Simpson County, Mississippi Hub. Sempra LNG & Midstream owns land in Port Arthur, Texas. Sempra Renewables has operations, investments or development projects in the various United States markets.
National Grid Transco, PLC Company Profile
National Grid plc is an electricity and gas utility company focused on transmission and distribution activities in electricity and gas in both the United Kingdom and the United States. The Company’s segments include UK Electricity Transmission, which is engaged in high voltage electricity transmission networks in Great Britain; UK Gas Transmission, which is the gas transmission network in Great Britain and United Kingdom liquefied natural gas (LNG) storage activities; UK Gas Distribution, which includes approximately four of the eight regional networks of Great Britain’s gas distribution system, and US Regulated, which includes gas distribution networks, electricity distribution networks and high voltage electricity transmission networks in New York, and New England and electricity generation facilities in New York. Its other activities relate to non-regulated businesses and other commercial operations not included within the above segments.
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