Exelon (NASDAQ:EXC) versus TransAlta (NYSE:TAC) Financial Comparison

Exelon (NASDAQ:EXC) and TransAlta (NYSE:TAC) are both utilities companies, but which is the superior investment? We will contrast the two companies based on the strength of their profitability, dividends, institutional ownership, valuation, earnings, risk and analyst recommendations.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Exelon	11.16%	9.85%	2.47%
TransAlta	-6.79%	-2.06%	-0.20%

Analyst Ratings

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

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Exelon	1	5	6	1	2.54
TransAlta	1	2	6	1	2.70

Exelon currently has a consensus target price of $50.55, indicating a potential upside of 9.41%. TransAlta has a consensus target price of $19.88, indicating a potential upside of 12.83%. Given TransAlta’s stronger consensus rating and higher probable upside, analysts plainly believe TransAlta is more favorable than Exelon.

Institutional & Insider Ownership

80.9% of Exelon shares are held by institutional investors. Comparatively, 59.0% of TransAlta shares are held by institutional investors. 0.1% of Exelon shares are held by insiders. Comparatively, 13.1% of TransAlta shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Earnings and Valuation

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Exelon	$23.77 billion	1.96	$2.46 billion	$2.63	17.57
TransAlta	$2.51 billion	2.08	$167.12 million	($0.42)	-41.94

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

Dividends

Exelon pays an annual dividend of $1.60 per share and has a dividend yield of 3.5%. TransAlta pays an annual dividend of $0.18 per share and has a dividend yield of 1.0%. Exelon pays out 60.8% of its earnings in the form of a dividend. TransAlta pays out -42.9% 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 and TransAlta has increased its dividend for 2 consecutive years. Exelon is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Risk and Volatility

Exelon has a beta of 0.4, suggesting that its stock price is 60% less volatile than the S&P 500. Comparatively, TransAlta has a beta of 0.79, suggesting that its stock price is 21% less volatile than the S&P 500.

Summary

Exelon beats TransAlta on 10 of the 16 factors compared between the two stocks.

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.

About TransAlta

TransAlta Corporation engages in the development, production, and sale of electric energy. It operates through Hydro, Wind and Solar, Gas, Energy Transition, and Energy Marketing segments. The Hydro segment holds interest of approximately 922 megawatts (MW) of owned hydroelectric generating capacity located in Alberta, British Columbia, and Ontario. The Wind and Solar segment has a net ownership interest of approximately 2,057 MW of owned wind and solar electrical-generating capacity, as well as battery storage facilities located in Alberta, Ontario, New Brunswick, and Québec in Canada; the states of Massachusetts, Minnesota, New Hampshire, North Carolina, Pennsylvania, Washington, and Wyoming in the United States; and the state of Western Australia. The Gas segment has a net ownership interest of approximately 2,775 MW of owned gas electrical-generating capacity, and facilities located in Alberta, Ontario, Michigan, and the state of Western Australia. The Energy Transition segment has a net ownership interest of approximately 671 MW of owned coal electrical-generating capacity, as well as operates the Skookumchuck hydro facility in Centralia; and engages in the highvale mine and the mine reclamation activities. The Energy Marketing segment is involved in the trading of power, natural gas, and environmental products. It serves customers in various industry segments, including commercial real estate, municipal, manufacturing, industrial, hospitality, finance, and oil and gas. TransAlta Corporation was founded in 1909 and is headquartered in Calgary, Canada.