Analyzing Cosan (NYSE:CSAN) and Brookfield Renewable (NYSE:BEPC)

Brookfield Renewable (NYSE:BEPC) and Cosan (NYSE:CSAN) are both mid-cap energy companies, but which is the better investment? We will compare the two businesses based on the strength of their profitability, risk, analyst recommendations, earnings, valuation, dividends and institutional ownership.

Dividends

Brookfield Renewable pays an annual dividend of $1.49 per share and has a dividend yield of 3.5%. Cosan pays an annual dividend of $0.31 per share and has a dividend yield of 6.5%. Brookfield Renewable pays out -167.4% of its earnings in the form of a dividend. Cosan pays out -34.1% 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. Brookfield Renewable has increased its dividend for 1 consecutive years.

Profitability

This table compares Brookfield Renewable and Cosan’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Brookfield Renewable	-34.58%	-12.74%	-3.20%
Cosan	-28.08%	-27.61%	-8.25%

Insider and Institutional Ownership

75.1% of Brookfield Renewable shares are held by institutional investors. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Volatility and Risk

Brookfield Renewable has a beta of 1.29, suggesting that its stock price is 29% more volatile than the S&P 500. Comparatively, Cosan has a beta of 1, suggesting that its stock price has a similar volatility profile to the S&P 500.

Earnings and Valuation

This table compares Brookfield Renewable and Cosan”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Brookfield Renewable	$5.88 billion	1.05	$236.00 million	($0.89)	-47.92
Cosan	$43.55 billion	0.05	-$1.75 billion	($0.91)	-5.25

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

Analyst Recommendations

This is a summary of current ratings and target prices for Brookfield Renewable and Cosan, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Brookfield Renewable	1	1	3	0	2.40
Cosan	2	2	1	0	1.80

Brookfield Renewable currently has a consensus target price of $37.50, suggesting a potential downside of 12.06%. Cosan has a consensus target price of $9.47, suggesting a potential upside of 98.21%. Given Cosan’s higher possible upside, analysts plainly believe Cosan is more favorable than Brookfield Renewable.

Summary

Brookfield Renewable beats Cosan on 11 of the 16 factors compared between the two stocks.

About Brookfield Renewable

Brookfield Renewable Corporation owns and operates a portfolio of renewable power and sustainable solution assets primarily in the United States, Europe, Colombia, and Brazil. It operates hydroelectric, wind, solar, and distributed energy and sustainable solutions with an installed capacity of approximately 19,161 megawatts. The company was incorporated in 2019 and is headquartered in New York, New York. Brookfield Renewable Corporation operates as a subsidiary of Brookfield BRP Holdings (Canada) Inc.

About Cosan

Cosan S.A. engages in the fuel distribution business. It operates through Raízen, Compass, Moove, Rumo, and Radar segments. The company’s Raízen segment engages in the production, commercialization, origination, and trading of ethanol, bioenergy, renewable sources, and sugar; trading and resale of electricity; and distribution and commercialization of fuels and lubricants. Its Compass segment distributes piped natural gas to industrial, residential, commercial, automotive, and cogeneration customers; and develops infrastructure projects in a regasification terminal, offshore gas pipeline, and thermal generation projects utilizing natural gas, as well as commercialization of electricity and natural gas. The company’s Moove segment produces and distributes lubricants under the Comma brand. Its Rumo segment provides logistics services for rail transportation, port storage, and loading of goods, including grains and sugar; and leases locomotives, wagons, and another railroad equipment, as well as operates containers. The company’s Radar segment manages agricultural property. It operates in Brazil, England, France, Spain and Portugal, Argentina, Bolivia, Uruguay and Paraguay, the United States, Asia, and internationally. Cosan S.A. was founded in 1936 and is headquartered in São Paulo, Brazil.