Head-To-Head Contrast: Pinnacle West Capital (NYSE:PNW) & Pacific Gas & Electric (NYSE:PCG)

Pinnacle West Capital (NYSE:PNW) and Pacific Gas & Electric (NYSE:PCG) are both large-cap utilities companies, but which is the superior stock? We will contrast the two companies based on the strength of their valuation, dividends, earnings, analyst recommendations, profitability, institutional ownership and risk.

Dividends

Pinnacle West Capital pays an annual dividend of $3.64 per share and has a dividend yield of 3.6%. Pacific Gas & Electric pays an annual dividend of $0.20 per share and has a dividend yield of 1.2%. Pinnacle West Capital pays out 71.9% of its earnings in the form of a dividend. Pacific Gas & Electric pays out 15.5% 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. Pacific Gas & Electric has increased its dividend for 1 consecutive years.

Profitability

This table compares Pinnacle West Capital and Pacific Gas & Electric’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Pinnacle West Capital	11.99%	9.29%	2.20%
Pacific Gas & Electric	11.44%	11.95%	2.65%

Risk and Volatility

Pinnacle West Capital has a beta of 0.46, indicating that its share price is 54% less volatile than the S&P 500. Comparatively, Pacific Gas & Electric has a beta of 0.29, indicating that its share price is 71% less volatile than the S&P 500.

Insider and Institutional Ownership

91.5% of Pinnacle West Capital shares are held by institutional investors. Comparatively, 78.6% of Pacific Gas & Electric shares are held by institutional investors. 0.2% of Pinnacle West Capital shares are held by insiders. Comparatively, 0.2% of Pacific Gas & Electric shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Earnings & Valuation

This table compares Pinnacle West Capital and Pacific Gas & Electric”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Pinnacle West Capital	$5.34 billion	2.30	$616.53 million	$5.06	20.02
Pacific Gas & Electric	$24.94 billion	1.76	$2.70 billion	$1.29	12.67

Pacific Gas & Electric has higher revenue and earnings than Pinnacle West Capital. Pacific Gas & Electric is trading at a lower price-to-earnings ratio than Pinnacle West Capital, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a summary of recent ratings and price targets for Pinnacle West Capital and Pacific Gas & Electric, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Pinnacle West Capital	0	13	3	0	2.19
Pacific Gas & Electric	1	4	7	1	2.62

Pinnacle West Capital presently has a consensus target price of $103.07, suggesting a potential upside of 1.74%. Pacific Gas & Electric has a consensus target price of $22.40, suggesting a potential upside of 37.06%. Given Pacific Gas & Electric’s stronger consensus rating and higher probable upside, analysts clearly believe Pacific Gas & Electric is more favorable than Pinnacle West Capital.

Summary

Pacific Gas & Electric beats Pinnacle West Capital on 11 of the 18 factors compared between the two stocks.

About Pinnacle West Capital

Pinnacle West Capital Corporation, through its subsidiary, provides retail and wholesale electric services primarily in the state of Arizona. The company engages in the generation, transmission, and distribution of electricity using coal, nuclear, gas, oil, and solar generating facilities. Its transmission facilities include overhead lines and underground lines; and distribution facilities consist of overhead lines and underground primary cables. The company also owns and maintains transmission and distribution substations; and owns energy storage facilities. Pinnacle West Capital Corporation was incorporated in 1985 and is headquartered in Phoenix, Arizona.

About Pacific Gas & Electric

PG&E Corp. operates as a holding company, which engages in generation, transmission, and distribution of electricity and natural gas to customers. It specializes in energy, utility, power, gas, electricity, solar and sustainability. The company was founded in 1995 and is headquartered in Oakland, CA.