Head to Head Analysis: E.On (OTCMKTS:EONGY) & PPL (NYSE:PPL)

PPL (NYSE:PPL) and E.On (OTCMKTS:EONGY) are both large-cap utilities companies, but which is the better business? We will contrast the two companies based on the strength of their profitability, institutional ownership, analyst recommendations, risk, dividends, earnings and valuation.

Analyst Ratings

This is a breakdown of recent ratings and target prices for PPL and E.On, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
PPL	0	2	9	1	2.92
E.On	1	7	2	0	2.10

PPL presently has a consensus price target of $41.00, suggesting a potential upside of 6.54%. Given PPL’s stronger consensus rating and higher probable upside, equities research analysts plainly believe PPL is more favorable than E.On.

Profitability

This table compares PPL and E.On’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
PPL	13.06%	9.29%	3.10%
E.On	2.20%	12.27%	2.74%

Dividends

PPL pays an annual dividend of $1.14 per share and has a dividend yield of 3.0%. E.On pays an annual dividend of $0.49 per share and has a dividend yield of 2.1%. PPL pays out 71.2% of its earnings in the form of a dividend. E.On pays out 66.2% 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. PPL has raised its dividend for 3 consecutive years. PPL is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Valuation & Earnings

This table compares PPL and E.On”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
PPL	$9.04 billion	3.20	$1.18 billion	$1.60	24.05
E.On	$89.03 billion	0.67	$1.96 billion	$0.74	30.81

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

Insider and Institutional Ownership

77.0% of PPL shares are owned by institutional investors. 0.3% of PPL shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Risk and Volatility

PPL has a beta of 0.7, indicating that its share price is 30% less volatile than the S&P 500. Comparatively, E.On has a beta of 0.8, indicating that its share price is 20% less volatile than the S&P 500.

Summary

PPL beats E.On on 12 of the 18 factors compared between the two stocks.

About PPL

PPL Corporation, an energy company, focuses on providing electricity and natural gas to approximately 3.6 million customers in the United States. It operates through three segments: Kentucky Regulated, Pennsylvania Regulated, and Rhode Island Regulated. The company delivers electricity to customers in Pennsylvania, Kentucky, Virginia, and Rhode Island; delivers natural gas to customers in Kentucky and Rhode Island; and generates electricity from power plants in Kentucky. PPL Corporation was founded in 1920 and is headquartered in Allentown, Pennsylvania.

About E.On

E.ON SE operates as an energy company in Germany, the United Kingdom, Sweden, the Netherlands, rest of Europe, and internationally. It operates through two segments, Energy Networks and Customer Solutions. The Energy Networks segment operates power and gas distribution networks, as well as provides maintenance, repairs, and related services. The Customer Solutions segment supplies power, gas, and heat, as well as with products and services that enhance energy efficiency to residential, small and medium-sized enterprises, large commercial and industrial, sales partners, and public entities. Additionally, it provides SmartSim, a software solution that allows renewable gases to be fed into gas grids; gas quality tracking solutions; GasPro, a mobile gas sample collector; metering solutions; and GasCalc, a software that calculates natural gases, LNG, and biogases properties. The company was founded in 1923 and is headquartered in Essen, Germany.