FirstEnergy Corporation (NYSE: FE) and PNM Resources, Inc. (Holding Co.) (NYSE:PNM) are both mid-cap utilities companies, but which is the superior business? We will contrast the two businesses based on the strength of their valuation, profitabiliy, institutional ownership, earnings, dividends, risk and analyst recommendations.

Earnings and Valuation

This table compares FirstEnergy Corporation and PNM Resources, Inc. (Holding Co.)’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
FirstEnergy Corporation $13.85 billion 1.02 $3.85 billion ($14.65) -2.17
PNM Resources, Inc. (Holding Co.) $1.38 billion 2.26 $541.80 million $1.62 24.20

FirstEnergy Corporation has higher revenue and earnings than PNM Resources, Inc. (Holding Co.). FirstEnergy Corporation is trading at a lower price-to-earnings ratio than PNM Resources, Inc. (Holding Co.), indicating that it is currently the more affordable of the two stocks.

Risk & Volatility

FirstEnergy Corporation has a beta of 0.17, meaning that its stock price is 83% less volatile than the S&P 500. Comparatively, PNM Resources, Inc. (Holding Co.) has a beta of 0.32, meaning that its stock price is 68% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for FirstEnergy Corporation and PNM Resources, Inc. (Holding Co.), as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
FirstEnergy Corporation 0 10 4 0 2.29
PNM Resources, Inc. (Holding Co.) 1 5 2 0 2.13

FirstEnergy Corporation currently has a consensus price target of $33.93, indicating a potential upside of 6.91%. PNM Resources, Inc. (Holding Co.) has a consensus price target of $36.28, indicating a potential downside of 7.45%. Given FirstEnergy Corporation’s stronger consensus rating and higher probable upside, analysts plainly believe FirstEnergy Corporation is more favorable than PNM Resources, Inc. (Holding Co.).

Dividends

FirstEnergy Corporation pays an annual dividend of $1.44 per share and has a dividend yield of 4.5%. PNM Resources, Inc. (Holding Co.) pays an annual dividend of $0.97 per share and has a dividend yield of 2.5%. FirstEnergy Corporation pays out -9.8% of its earnings in the form of a dividend. PNM Resources, Inc. (Holding Co.) pays out 59.9% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. PNM Resources, Inc. (Holding Co.) has increased its dividend for 5 consecutive years. FirstEnergy Corporation is clearly the better dividend stock, given its higher yield and lower payout ratio.

Insider and Institutional Ownership

77.9% of FirstEnergy Corporation shares are owned by institutional investors. Comparatively, 94.1% of PNM Resources, Inc. (Holding Co.) shares are owned by institutional investors. 0.3% of FirstEnergy Corporation shares are owned by company insiders. Comparatively, 1.3% of PNM Resources, Inc. (Holding Co.) shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Profitability

This table compares FirstEnergy Corporation and PNM Resources, Inc. (Holding Co.)’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
FirstEnergy Corporation -44.23% 12.79% 2.38%
PNM Resources, Inc. (Holding Co.) 9.62% 8.22% 2.24%

Summary

FirstEnergy Corporation beats PNM Resources, Inc. (Holding Co.) on 9 of the 16 factors compared between the two stocks.

About FirstEnergy Corporation

FirstEnergy Corp. is a holding company. The Company is engaged in holding, directly or indirectly, all of the outstanding equity of its principal subsidiaries. Its segments include Regulated Distribution, Regulated Transmission, Competitive Energy Services (CES) and Corporate/Other. As of December 31, 2016, the Regulated Distribution segment distributed electricity through the Company’s 10 utility operating companies, serving approximately six million customers, and purchased power for its provider of last resort (POLR), standard offer service (SOS), standard offer service (SSO) and default service requirements in Ohio, Pennsylvania, New Jersey and Maryland. The Regulated Transmission segment transmits electricity through transmission facilities owned and operated by American Transmission Systems, Incorporated (ATSI) and Trans-Allegheny Interstate Line Company (TrAIL). The CES segment primarily supplies electricity to end use customers through retail and wholesale arrangements.

About PNM Resources, Inc. (Holding Co.)

PNM Resources, Inc. (PNMR) is an investor-owned holding company with approximately two regulated utilities providing electricity and electric services in New Mexico and Texas. PNMR’s electric utilities are Public Service Company of New Mexico (PNM) and Texas-New Mexico Power Company (TNMP). It operates in three segments: PNM, TNMP, and Corporate and Other. The Company, through its Website provides information, including news releases, notices of Webcasts, and filings. PNM is an electric utility that provides electric generation, transmission and distribution service to its rate-regulated customers. TNMP is a regulated utility operating in Texas. TNMP provides transmission and distribution services in Texas under the provisions of Texas Electric Choice Act (TECA) and the Texas Public Utility Regulatory Act. The Corporate and Other segment includes PNMR holding company activities, related to corporate level debt and PNMR Services Company.

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