Avangrid (NYSE: AGR) and Sempra Energy (NYSE:SRE) are both large-cap utilities companies, but which is the superior investment? We will contrast the two companies based on the strength of their dividends, risk, valuation, analyst recommendations, profitability, institutional ownership and earnings.

Valuation & Earnings

This table compares Avangrid and Sempra Energy’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Avangrid $6.00 billion 2.44 $1.94 billion $2.18 21.75
Sempra Energy $10.97 billion 2.73 $3.71 billion $6.75 17.67

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

Profitability

This table compares Avangrid and Sempra Energy’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Avangrid 11.25% 4.52% 2.20%
Sempra Energy 15.51% 9.11% 2.84%

Analyst Ratings

This is a breakdown of current recommendations and price targets for Avangrid and Sempra Energy, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Avangrid 1 0 4 0 2.60
Sempra Energy 0 2 4 0 2.67

Avangrid presently has a consensus target price of $44.88, indicating a potential downside of 5.37%. Sempra Energy has a consensus target price of $121.60, indicating a potential upside of 1.97%. Given Sempra Energy’s stronger consensus rating and higher possible upside, analysts plainly believe Sempra Energy is more favorable than Avangrid.

Insider and Institutional Ownership

13.2% of Avangrid shares are held by institutional investors. Comparatively, 81.2% of Sempra Energy shares are held by institutional investors. 0.3% of Avangrid shares are held by insiders. Comparatively, 0.2% of Sempra Energy shares are held by 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.

Volatility & Risk

Avangrid has a beta of 0.51, suggesting that its share price is 49% less volatile than the S&P 500. Comparatively, Sempra Energy has a beta of 0.55, suggesting that its share price is 45% less volatile than the S&P 500.

Dividends

Avangrid pays an annual dividend of $1.73 per share and has a dividend yield of 3.6%. Sempra Energy pays an annual dividend of $3.29 per share and has a dividend yield of 2.8%. Avangrid pays out 79.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Sempra Energy pays out 48.7% of its earnings in the form of a dividend. Sempra Energy has increased its dividend for 6 consecutive years.

Summary

Sempra Energy beats Avangrid on 13 of the 16 factors compared between the two stocks.

Avangrid Company Profile

Avangrid, Inc. is an energy and utility company. The Company operates through three segments: Networks, Renewables and Gas. The Networks segment includes all the energy transmission and distribution activities, and any other regulated activity originating in New York and Maine, and regulated electric distribution, electric transmission and gas distribution activities originating in Connecticut and Massachusetts. The Renewables segment owns, develops, constructs and/or operates electricity generation, including renewable and thermal generators, and associated transmission facilities. The Renewables segment includes activities relating to renewable energy, mainly wind energy generation and trading related with such activities. The Gas segment operates a natural gas storage and natural gas trading business through its subsidiaries, Enstor, Inc. and Enstor Energy Services, LLC.

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.

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