Critical Analysis: United Utilities Group (OTCMKTS:UUGRY) versus Fortis (NYSE:FTS)

United Utilities Group (OTCMKTS:UUGRY) and Fortis (NYSE:FTS) are both utilities companies, but which is the superior investment? We will compare the two companies based on the strength of their profitability, risk, analyst recommendations, earnings, institutional ownership, valuation and dividends.

Institutional and Insider Ownership

57.8% of Fortis shares are owned by institutional investors. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Profitability

This table compares United Utilities Group and Fortis’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
United Utilities Group	N/A	N/A	N/A
Fortis	14.48%	7.24%	2.38%

Dividends

United Utilities Group pays an annual dividend of $1.68 per share and has a dividend yield of 5.2%. Fortis pays an annual dividend of $1.78 per share and has a dividend yield of 3.5%. Fortis pays out 73.3% of its earnings in the form of a dividend. Fortis has increased its dividend for 5 consecutive years.

Valuation and Earnings

This table compares United Utilities Group and Fortis”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
United Utilities Group	$2.70 billion	N/A	$337.73 million	N/A	N/A
Fortis	$8.40 billion	3.09	$1.23 billion	$2.43	21.16

Fortis has higher revenue and earnings than United Utilities Group.

Volatility & Risk

United Utilities Group has a beta of 0.75, meaning that its share price is 25% less volatile than the S&P 500. Comparatively, Fortis has a beta of 0.5, meaning that its share price is 50% less volatile than the S&P 500.

Analyst Recommendations

This is a summary of current ratings and price targets for United Utilities Group and Fortis, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
United Utilities Group	0	3	1	2	2.83
Fortis	0	6	5	1	2.58

Fortis has a consensus price target of $72.00, suggesting a potential upside of 40.03%. Given Fortis’ higher probable upside, analysts clearly believe Fortis is more favorable than United Utilities Group.

Summary

Fortis beats United Utilities Group on 9 of the 14 factors compared between the two stocks.

About United Utilities Group

United Utilities Group PLC provides water and wastewater services in the United Kingdom. It is involved in the renewable energy generation, corporate trustee, financing, and property management activities; and provision of consulting, and project management services. The company operates 43,000 kilometers of water pipes; and 79,000 kilometers of wastewater pipes. United Utilities Group PLC was incorporated in 2008 and is based in Warrington, the United Kingdom.

About Fortis

Fortis Inc. operates as an electric and gas utility company in Canada, the United States, and the Caribbean countries. It generates, transmits, and distributes electricity to approximately 447,000 retail customers in southeastern Arizona; and 103,000 retail customers in Arizona's Mohave and Santa Cruz counties with an aggregate capacity of 3,408 megawatts (MW), including 68 MW of solar capacity and 250 MV of wind capacity. The company also sells wholesale electricity to other entities in the western United States; owns gas-fired and hydroelectric generating capacity totaling 65 MW; and distributes natural gas to approximately 1,087,000 residential, commercial, and industrial customers in British Columbia, Canada. In addition, it owns and operates the electricity distribution system that serves approximately 592,000 customers in southern and central Alberta; owns four hydroelectric generating facilities with a combined capacity of 225 MW; and provides operation, maintenance, and management services to five hydroelectric generating facilities. Further, the company distributes electricity in the island portion of Newfoundland and Labrador with an installed generating capacity of 145 MW; and on Prince Edward Island with a generating capacity of 90 MW. Additionally, it provides integrated electric utility service to approximately 69,000 customers in Ontario; approximately 275,000 customers in Newfoundland and Labrador; approximately 34,000 customers on Grand Cayman, Cayman Islands; and approximately 17,000 customers on certain islands in Turks and Caicos. It also holds long-term contracted generation assets in Belize consisting of 3 hydroelectric generating facilities with a combined capacity of 51 MW; and the Aitken Creek natural gas storage facility. It also owns and operates approximately 90,500 circuit Kilometers (km) of distribution lines; and approximately 51,600 km of natural gas pipelines. Fortis Inc. was founded in 1885 and is headquartered in St. John's, Canada.