Xcel Energy (NASDAQ:XEL) & CenterPoint Energy (NYSE:CNP) Financial Analysis

Xcel Energy (NASDAQ:XEL) and CenterPoint Energy (NYSE:CNP) are both large-cap utilities companies, but which is the better stock? We will compare the two companies based on the strength of their valuation, profitability, institutional ownership, earnings, dividends, risk and analyst recommendations.

Volatility and Risk

Xcel Energy has a beta of 0.46, suggesting that its share price is 54% less volatile than the S&P 500. Comparatively, CenterPoint Energy has a beta of 0.59, suggesting that its share price is 41% less volatile than the S&P 500.

Institutional and Insider Ownership

78.4% of Xcel Energy shares are owned by institutional investors. Comparatively, 91.8% of CenterPoint Energy shares are owned by institutional investors. 0.1% of Xcel Energy shares are owned by insiders. Comparatively, 0.1% of CenterPoint Energy shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Dividends

Xcel Energy pays an annual dividend of $2.28 per share and has a dividend yield of 2.8%. CenterPoint Energy pays an annual dividend of $0.88 per share and has a dividend yield of 2.1%. Xcel Energy pays out 66.7% of its earnings in the form of a dividend. CenterPoint Energy pays out 55.7% 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. Xcel Energy has increased its dividend for 22 consecutive years and CenterPoint Energy has increased its dividend for 5 consecutive years. Xcel Energy is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Recommendations

This is a summary of current ratings and target prices for Xcel Energy and CenterPoint Energy, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Xcel Energy	1	0	13	3	3.06
CenterPoint Energy	1	5	7	0	2.46

Xcel Energy presently has a consensus target price of $88.13, suggesting a potential upside of 8.02%. CenterPoint Energy has a consensus target price of $41.82, suggesting a potential downside of 1.56%. Given Xcel Energy’s stronger consensus rating and higher probable upside, analysts clearly believe Xcel Energy is more favorable than CenterPoint Energy.

Profitability

This table compares Xcel Energy and CenterPoint Energy’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Xcel Energy	13.76%	10.83%	2.95%
CenterPoint Energy	11.37%	10.25%	2.52%

Earnings & Valuation

This table compares Xcel Energy and CenterPoint Energy”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Xcel Energy	$14.67 billion	3.29	$2.02 billion	$3.42	23.86
CenterPoint Energy	$8.64 billion	3.21	$1.02 billion	$1.58	26.89

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

Summary

Xcel Energy beats CenterPoint Energy on 13 of the 18 factors compared between the two stocks.

About Xcel Energy

Xcel Energy Inc., through its subsidiaries, engages in the generation, purchasing, transmission, distribution, and sale of electricity. It operates through Regulated Electric Utility, Regulated Natural Gas Utility, and All Other segments. The company generates electricity through wind, nuclear, hydroelectric, biomass, and solar energy sources, as well as coal, natural gas, oil, wood, and refuse-derived fuels. It also purchases, transports, distributes, and sells natural gas to retail customers, as well as transports customer-owned natural gas. In addition, the company develops and leases natural gas pipelines, and storage and compression facilities; and invests in rental housing projects and nonregulated assets, as well as procures equipment for the construction of renewable generation facilities. It serves residential, commercial, and industrial customers in the portions of Colorado, Michigan, Minnesota, New Mexico, North Dakota, South Dakota, Texas, and Wisconsin. The company was incorporated in 1909 and is headquartered in Minneapolis, Minnesota.

About CenterPoint Energy

CenterPoint Energy, Inc. operates as a public utility holding company in the United States. The company operates through two segments, Electric and Natural Gas. The Electric segment includes electric transmission and distribution services to electric customers and electric generation assets, as well as optimizes assets in the wholesale power market. The Natural Gas segment engages in the intrastate natural gas sales, and natural gas transportation and distribution for residential, commercial, industrial and institutional customers in Indiana, Louisiana, Minnesota, Mississippi, Ohio, and Texas; permanent pipeline connections through interconnects with various interstate and intrastate pipeline companies; and provides maintenance and repair services of home appliances to customers in Minnesota and home repair protection plans to natural gas customers in Indiana, Mississippi, Ohio, and Texas through a third party. It serves approximately 2,534,730 metered customers; owned 348 substations with transformer capacity of 79,719 megavolt amperes; and owned and operated 217 miles of intrastate pipeline in Louisiana and Texas. The company was founded in 1866 and is headquartered in Houston, Texas.