Contrasting Unitil (NYSE:UTL) and National Grid Transco (NYSE:NGG)

National Grid Transco (NYSE:NGG) and Unitil (NYSE:UTL) are both utilities companies, but which is the superior business? We will contrast the two companies based on the strength of their earnings, analyst recommendations, risk, valuation, institutional ownership, profitability and dividends.

Profitability

This table compares National Grid Transco and Unitil’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
National Grid Transco	N/A	N/A	N/A
Unitil	9.54%	9.46%	2.69%

Analyst Recommendations

This is a summary of recent ratings for National Grid Transco and Unitil, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
National Grid Transco	0	5	4	1	2.60
Unitil	0	2	0	0	2.00

National Grid Transco presently has a consensus price target of $80.40, indicating a potential upside of 9.53%. Unitil has a consensus price target of $55.00, indicating a potential upside of 17.21%. Given Unitil’s higher probable upside, analysts clearly believe Unitil is more favorable than National Grid Transco.

Risk & Volatility

National Grid Transco has a beta of 0.7, indicating that its share price is 30% less volatile than the S&P 500. Comparatively, Unitil has a beta of 0.65, indicating that its share price is 35% less volatile than the S&P 500.

Institutional and Insider Ownership

4.7% of National Grid Transco shares are owned by institutional investors. Comparatively, 76.8% of Unitil shares are owned by institutional investors. 2.0% of Unitil shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Valuation & Earnings

This table compares National Grid Transco and Unitil”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
National Grid Transco	$23.61 billion	3.08	$3.70 billion	$5.20	14.12
Unitil	$494.80 million	1.68	$47.10 million	$2.91	16.13

National Grid Transco has higher revenue and earnings than Unitil. National Grid Transco is trading at a lower price-to-earnings ratio than Unitil, indicating that it is currently the more affordable of the two stocks.

Dividends

National Grid Transco pays an annual dividend of $4.07 per share and has a dividend yield of 5.5%. Unitil pays an annual dividend of $1.80 per share and has a dividend yield of 3.8%. National Grid Transco pays out 78.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Unitil pays out 61.9% of its earnings in the form of a dividend. Unitil has raised its dividend for 12 consecutive years.

About National Grid Transco

National Grid plc transmits and distributes electricity and gas. It operates through UK Electricity Transmission, UK Electricity Distribution, UK Electricity System Operator, New England, New York, National Grid Ventures, and Other segments. The UK Electricity Transmission segment provides electricity transmission and construction work services in England and Wales. The UK Electricity Distribution segment offers electricity distribution services in Midlands, and South West of England and South Wales. The UK Electricity System Operator segment provides balancing services for supply and demand of electricity on Great Britain’s electricity transmission system; and acts as an agent on behalf of transmission operators. The New England segment offers electricity and gas distribution, and electricity transmission services in New England. The New York segment provides electricity and gas distribution, and electricity transmission services in New York. The National Grid Ventures segment provides transmission services through electricity interconnectors and LNG importation at the Isle of Grain, as well as sale of renewables projects. The Other segment engages in the leasing and sale of commercial property, as well as insurance activities in the United Kingdom. The company was founded in 1990 and is headquartered in London, the United Kingdom.

About Unitil

Unitil Corporation, a public utility holding company, engages in the distribution of electricity and natural gas. It operates through two segments, Utility Electric Operations, Utility Gas Operations. The company distributes electricity in the southeastern seacoast and state capital regions of New Hampshire, and the greater Fitchburg area of north central Massachusetts; and distributes natural gas in southeastern New Hampshire and portions of southern and central Maine, including the city of Portland and the Lewiston-Auburn area, as well as electricity and natural gas in the greater Fitchburg area of north central Massachusetts. It also operates 86 miles of interstate underground natural gas transmission pipeline that provides interstate natural gas pipeline access and transportation services primarily in Maine and New Hampshire. In addition, the company provides real estate management services. It serves approximately 108,100 electric customers and 87,500 natural gas customers. Unitil Corporation was incorporated in 1984 and is headquartered in Hampton, New Hampshire.