Analyzing Terna (OTCMKTS:TERRF) & Hydro One (OTCMKTS:HRNNF)

Terna (OTCMKTS:TERRF) and Hydro One (OTCMKTS:HRNNF) are both utilities companies, but which is the superior investment? We will contrast the two businesses based on the strength of their institutional ownership, valuation, earnings, risk, dividends, analyst recommendations and profitability.

Analyst Ratings

This is a summary of recent recommendations for Terna and Hydro One, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Terna	0	0	0	0	0.00
Hydro One	0	5	1	0	2.17

Valuation and Earnings

This table compares Terna and Hydro One”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Terna	N/A	N/A	N/A	$0.26	38.70
Hydro One	$6.19 billion	3.86	$843.65 million	$0.75	53.09

Hydro One has higher revenue and earnings than Terna. Terna is trading at a lower price-to-earnings ratio than Hydro One, indicating that it is currently the more affordable of the two stocks.

Dividends

Terna pays an annual dividend of $0.16 per share and has a dividend yield of 1.6%. Hydro One pays an annual dividend of $0.95 per share and has a dividend yield of 2.4%. Terna pays out 61.8% of its earnings in the form of a dividend. Hydro One pays out 126.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Profitability

This table compares Terna and Hydro One’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Terna	N/A	N/A	N/A
Hydro One	14.74%	10.52%	3.47%

Institutional & Insider Ownership

20.2% of Terna shares are held by institutional investors. 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.

Summary

Hydro One beats Terna on 9 of the 11 factors compared between the two stocks.

About Terna

Terna S.p.A., together with its subsidiaries, provides electricity transmission and dispatching services in Italy, other Euro-area countries, and internationally. It operates through Regulated, Non-Regulated, and International segments. The company is involved in the design, construction, management, development, operation, and maintenance of national transmission grid; dispatching and metering; and construction of storage systems. It also supplies transformers and cables; provides energy and connectivity services; and installs and operates interconnecting lines. In addition, the company designs, produces, commercializes, and repairs power transformers for electricity transmission and distribution grids; industrial transformers for the steel and metals industries; special transformers for convertors used in electrochemical production; produces and sells marine and terrestrial cables; develops renewable energy projects; and undertakes private interconnector projects. Terna S.p.A. was founded in 1962 and is based in Rome, Italy.

About Hydro One

Hydro One Limited, through its subsidiaries, operates as an electricity transmission and distribution company in Ontario. The company operates through three segments: Transmission, Distribution, and Other. It owns and operates approximately 30,000 circuit kilometers of high-voltage transmission lines and approximately 125,000 circuit kilometers primary low-voltage distribution lines. The company serves residential, small business, commercial, and industrial customers, as well as municipal utilities. It also provides telecommunications support services for its transmission and distribution businesses; and information and communications technology services and solutions. The company was incorporated in 2015 and is headquartered in Toronto, Canada.