Reviewing Exelon (NASDAQ:EXC) and RWE (OTCMKTS:RWEOY)

RWE (OTCMKTS:RWEOY) and Exelon (NASDAQ:EXC) are both large-cap utilities companies, but which is the superior stock? We will compare the two companies based on the strength of their earnings, analyst recommendations, valuation, dividends, risk, profitability and institutional ownership.

Profitability

This table compares RWE and Exelon’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
RWE	21.25%	5.34%	2.10%
Exelon	10.17%	9.75%	2.41%

Valuation & Earnings

This table compares RWE and Exelon”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
RWE	$19.94 billion	2.33	$3.54 billion	$5.26	12.14
Exelon	$25.94 billion	1.86	$2.77 billion	$2.57	18.11

RWE has higher earnings, but lower revenue than Exelon. RWE is trading at a lower price-to-earnings ratio than Exelon, indicating that it is currently the more affordable of the two stocks.

Insider & Institutional Ownership

80.9% of Exelon shares are held by institutional investors. 0.1% of Exelon shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Dividends

RWE pays an annual dividend of $1.00 per share and has a dividend yield of 1.6%. Exelon pays an annual dividend of $1.68 per share and has a dividend yield of 3.6%. RWE pays out 19.0% of its earnings in the form of a dividend. Exelon pays out 65.4% 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. Exelon has increased its dividend for 3 consecutive years. Exelon is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Recommendations

This is a breakdown of recent ratings for RWE and Exelon, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
RWE	0	5	3	0	2.38
Exelon	1	14	5	0	2.20

Exelon has a consensus target price of $48.33, indicating a potential upside of 3.88%. Given Exelon’s higher possible upside, analysts clearly believe Exelon is more favorable than RWE.

Volatility and Risk

RWE has a beta of 0.57, suggesting that its share price is 43% less volatile than the S&P 500. Comparatively, Exelon has a beta of 0.24, suggesting that its share price is 76% less volatile than the S&P 500.

Summary

Exelon beats RWE on 10 of the 17 factors compared between the two stocks.

About RWE

RWE Aktiengesellschaft generates and supplies electricity from renewable and conventional sources in Germany, the United Kingdom, rest of Europe, North America, and internationally. It operates through five segments: Offshore Wind; Onshore Wind/Solar; Hydro/Biomass/Gas; Supply & Trading; and Coal/Nuclear. The company generates wind, hydro, solar, nuclear, gas, and biomass electricity. It also trades in electricity, gas, and energy commodities; operates gas storage facilities; and engages in battery storage activities. The company serves commercial, industrial, and corporate customers. RWE Aktiengesellschaft was founded in 1898 and is headquartered in Essen, Germany.

About Exelon

Exelon Corporation, a utility services holding company, engages in the energy distribution and transmission businesses in the United States and Canada. The company is involved in the purchase and regulated retail sale of electricity and natural gas, transmission and distribution of electricity, and distribution of natural gas to retail customers. It also offers support services, including legal, human resources, information technology, supply management, financial, engineering, customer operations, transmission and distribution planning, asset management, system operations, and power procurement services. It serves distribution utilities, municipalities, and financial institutions, as well as commercial, industrial, governmental, and residential customers. Exelon Corporation was incorporated in 1999 and is headquartered in Chicago, Illinois.