Calpine Corporation (NYSE: CPN) and Public Service Enterprise Group (NYSE:PEG) are both mid-cap utilities companies, but which is the better investment? We will compare the two businesses based on the strength of their earnings, profitability, risk, analyst recommendations, dividends, valuation and institutional ownership.

Valuation & Earnings

This table compares Calpine Corporation and Public Service Enterprise Group’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Calpine Corporation $8.03 billion 0.66 $1.55 billion $0.13 113.01
Public Service Enterprise Group $9.27 billion 2.50 $3.60 billion $0.89 51.48

Public Service Enterprise Group has higher revenue and earnings than Calpine Corporation. Public Service Enterprise Group is trading at a lower price-to-earnings ratio than Calpine Corporation, indicating that it is currently the more affordable of the two stocks.

Institutional and Insider Ownership

97.2% of Calpine Corporation shares are held by institutional investors. Comparatively, 66.0% of Public Service Enterprise Group shares are held by institutional investors. 1.2% of Calpine Corporation shares are held by insiders. Comparatively, 0.6% of Public Service Enterprise Group shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Analyst Ratings

This is a breakdown of current ratings and target prices for Calpine Corporation and Public Service Enterprise Group, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Calpine Corporation 0 7 3 0 2.30
Public Service Enterprise Group 0 6 6 0 2.50

Calpine Corporation currently has a consensus price target of $14.84, suggesting a potential upside of 1.05%. Public Service Enterprise Group has a consensus price target of $48.05, suggesting a potential upside of 4.87%. Given Public Service Enterprise Group’s stronger consensus rating and higher possible upside, analysts clearly believe Public Service Enterprise Group is more favorable than Calpine Corporation.

Dividends

Public Service Enterprise Group pays an annual dividend of $1.72 per share and has a dividend yield of 3.8%. Calpine Corporation does not pay a dividend. Public Service Enterprise Group pays out 193.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Public Service Enterprise Group has increased its dividend for 5 consecutive years.

Risk & Volatility

Calpine Corporation has a beta of 1.01, suggesting that its stock price is 1% more volatile than the S&P 500. Comparatively, Public Service Enterprise Group has a beta of 0.39, suggesting that its stock price is 61% less volatile than the S&P 500.

Profitability

This table compares Calpine Corporation and Public Service Enterprise Group’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Calpine Corporation 0.57% -8.92% -1.57%
Public Service Enterprise Group 4.88% 11.46% 3.77%

Summary

Public Service Enterprise Group beats Calpine Corporation on 12 of the 17 factors compared between the two stocks.

Calpine Corporation Company Profile

Calpine Corporation is a power generation company. The Company is engaged in the ownership and operation of primarily natural gas-fired and geothermal power plants in North America. The Company’s segments include West (including geothermal), Texas and East (including Canada). In the Northeast and Mid-Atlantic regions, the Company has generating units capable of burning either natural gas or fuel oil. As of December 31, 2016, the Company’s portfolio consisted of two types of power generation technologies, including natural gas-fired combustion turbines, such as combined-cycle plants, and renewable geothermal conventional steam turbines. As of December 31, 2016, the Company’s portfolio included 80 power plants, including one under construction, with an aggregate generation capacity of 25,908 Megawatt (MW) and 828 MW under construction. As of December 31, 2016, it had four MW of capacity from solar power generation technology at its Vineland Solar Energy Center in New Jersey.

Public Service Enterprise Group Company Profile

Public Service Enterprise Group Incorporated (PSEG) is a holding company. The Company is an energy company with operations located primarily in the Northeastern and Mid-Atlantic United States. The Company’s segments include Public Service Electric and Gas Company (PSE&G), PSEG Power LLC (Power) and Other. PSEG is engaged in the transmission of electricity and distribution of electricity and natural gas in certain areas of New Jersey. PSE&G is also the provider of last resort for gas and electric commodity service for end users in its service territory. Power is a multi-regional energy supply company that integrates the operations of its merchant nuclear and fossil generating assets with its power marketing businesses through energy sales in energy markets and fuel supply functions primarily in the Northeast and Mid-Atlantic United States through its principal subsidiaries. In addition, Power owns and operates solar generation in various states.

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