Analyzing Algonquin Power & Utilities (NYSE:AQN) and NiSource (NYSE:NI)

Algonquin Power & Utilities (NYSE:AQN) and NiSource (NYSE:NI) are both utilities companies, but which is the superior stock? We will compare the two companies based on the strength of their earnings, institutional ownership, risk, valuation, dividends, profitability and analyst recommendations.

Analyst Ratings

This is a breakdown of recent recommendations and price targets for Algonquin Power & Utilities and NiSource, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Algonquin Power & Utilities	1	6	6	0	2.38
NiSource	0	1	12	0	2.92

Algonquin Power & Utilities presently has a consensus target price of $6.43, indicating a potential upside of 14.75%. NiSource has a consensus target price of $48.58, indicating a potential upside of 7.23%. Given Algonquin Power & Utilities’ higher possible upside, analysts plainly believe Algonquin Power & Utilities is more favorable than NiSource.

Profitability

This table compares Algonquin Power & Utilities and NiSource’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Algonquin Power & Utilities	6.44%	5.58%	1.92%
NiSource	13.56%	8.16%	2.60%

Dividends

Algonquin Power & Utilities pays an annual dividend of $0.26 per share and has a dividend yield of 4.6%. NiSource pays an annual dividend of $1.20 per share and has a dividend yield of 2.6%. Algonquin Power & Utilities pays out 123.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. NiSource pays out 61.5% of its earnings in the form of a dividend. NiSource has raised its dividend for 14 consecutive years.

Risk and Volatility

Algonquin Power & Utilities has a beta of 0.73, indicating that its stock price is 27% less volatile than the S&P 500. Comparatively, NiSource has a beta of 0.53, indicating that its stock price is 47% less volatile than the S&P 500.

Valuation & Earnings

This table compares Algonquin Power & Utilities and NiSource”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Algonquin Power & Utilities	$2.61 billion	1.65	$180.80 million	$0.21	26.69
NiSource	$6.96 billion	3.12	$929.50 million	$1.95	23.23

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

Institutional and Insider Ownership

62.3% of Algonquin Power & Utilities shares are owned by institutional investors. Comparatively, 91.6% of NiSource shares are owned by institutional investors. 0.1% of Algonquin Power & Utilities shares are owned by company insiders. Comparatively, 0.4% of NiSource shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Summary

NiSource beats Algonquin Power & Utilities on 13 of the 17 factors compared between the two stocks.

About Algonquin Power & Utilities

Algonquin Power & Utilities Corp. is a Canadian utility company whose regulated businesses provide electricity, natural gas, water and wastewater services to customers in the United States and Canada. Many of its utility operations serve customers under the Liberty brand. The company has historically combined utility services with renewable power generation. Following the sale of its renewable energy business, Algonquin shifted its focus toward its regulated utility operations and the infrastructure needed to deliver essential services.

About NiSource

NiSource Inc. is a regulated energy holding company that delivers natural gas and electricity through its local utility subsidiaries. Its businesses focus on operating and maintaining energy infrastructure and providing service to residential, commercial and industrial customers. The company’s natural gas utilities serve customers in Indiana, Kentucky, Maryland, Ohio, Pennsylvania and Virginia. Its electric utility, Northern Indiana Public Service Company (NIPSCO), serves customers in northern Indiana.