RWE (OTCMKTS:RWEOY – Get Free Report) and Edison International (NYSE:EIX – Get Free Report) are both large-cap utilities companies, but which is the superior business? We will contrast the two companies based on the strength of their profitability, earnings, analyst recommendations, institutional ownership, dividends, valuation and risk.
Profitability
This table compares RWE and Edison International’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| RWE | 11.32% | 4.85% | 1.75% |
| Edison International | 17.24% | 13.62% | 2.63% |
Dividends
RWE pays an annual dividend of $0.87 per share and has a dividend yield of 1.8%. Edison International pays an annual dividend of $3.31 per share and has a dividend yield of 6.0%. RWE pays out 22.7% of its earnings in the form of a dividend. Edison International pays out 43.3% 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. Edison International has increased its dividend for 23 consecutive years. Edison International is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Analyst Recommendations
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| RWE | 0 | 1 | 3 | 1 | 3.00 |
| Edison International | 1 | 8 | 6 | 1 | 2.44 |
RWE currently has a consensus target price of $53.30, suggesting a potential upside of 7.79%. Edison International has a consensus target price of $64.30, suggesting a potential upside of 16.07%. Given Edison International’s higher probable upside, analysts plainly believe Edison International is more favorable than RWE.
Risk and Volatility
RWE has a beta of 0.7, indicating that its stock price is 30% less volatile than the S&P 500. Comparatively, Edison International has a beta of 0.8, indicating that its stock price is 20% less volatile than the S&P 500.
Institutional & Insider Ownership
88.9% of Edison International shares are owned by institutional investors. 1.2% of Edison International shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.
Earnings & Valuation
This table compares RWE and Edison International”s top-line revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| RWE | $26.22 billion | 1.28 | $5.56 billion | $3.84 | 12.88 |
| Edison International | $18.09 billion | 1.18 | $1.55 billion | $7.65 | 7.24 |
RWE has higher revenue and earnings than Edison International. Edison International is trading at a lower price-to-earnings ratio than RWE, indicating that it is currently the more affordable of the two stocks.
Summary
Edison International beats RWE on 11 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 Edison International
Edison International, through its subsidiaries, engages in the generation and distribution of electric power. The company supplies and delivers electricity to approximately 50,000 square mile area of southern California to residential, commercial, industrial, public authorities, agricultural, and other sectors. Its transmission facilities consist of lines ranging from 55 kV to 500 kV and approximately 80 transmission substations; distribution system consists of approximately 38,000 circuit-miles of overhead lines; approximately 31,000 circuit-miles of underground lines; and 730 distribution substations. The company was founded in 1886 and is based in Rosemead, California.
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