Head to Head Analysis: Exelon (NASDAQ:EXC) and PPL (NYSE:PPL)

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

Risk & Volatility

PPL has a beta of 0.7, suggesting that its share price is 30% less volatile than the S&P 500. Comparatively, Exelon has a beta of 0.45, suggesting that its share price is 55% less volatile than the S&P 500.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
PPL	13.06%	9.29%	3.10%
Exelon	11.41%	9.97%	2.48%

Analyst Recommendations

This is a summary of current ratings for PPL and Exelon, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
PPL	0	2	9	1	2.92
Exelon	2	7	8	0	2.35

PPL presently has a consensus target price of $41.00, suggesting a potential upside of 8.31%. Exelon has a consensus target price of $50.50, suggesting a potential upside of 3.04%. Given PPL’s stronger consensus rating and higher possible upside, research analysts plainly believe PPL is more favorable than Exelon.

Valuation & Earnings

This table compares PPL and Exelon”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
PPL	$9.04 billion	3.15	$1.18 billion	$1.60	23.66
Exelon	$24.26 billion	2.07	$2.77 billion	$2.73	17.95

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

Insider & Institutional Ownership

77.0% of PPL shares are held by institutional investors. Comparatively, 80.9% of Exelon shares are held by institutional investors. 0.2% of PPL shares are held by insiders. Comparatively, 0.1% of Exelon shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Dividends

PPL pays an annual dividend of $1.09 per share and has a dividend yield of 2.9%. Exelon pays an annual dividend of $1.68 per share and has a dividend yield of 3.4%. PPL pays out 68.1% of its earnings in the form of a dividend. Exelon pays out 61.5% 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. PPL has increased its dividend for 3 consecutive years and Exelon has increased its dividend for 3 consecutive years. Exelon is clearly the better dividend stock, given its higher yield and lower payout ratio.

Summary

PPL beats Exelon on 10 of the 17 factors compared between the two stocks.

About PPL

PPL Corporation, an energy company, focuses on providing electricity and natural gas to approximately 3.6 million customers in the United States. It operates through three segments: Kentucky Regulated, Pennsylvania Regulated, and Rhode Island Regulated. The company delivers electricity to customers in Pennsylvania, Kentucky, Virginia, and Rhode Island; delivers natural gas to customers in Kentucky and Rhode Island; and generates electricity from power plants in Kentucky. PPL Corporation was founded in 1920 and is headquartered in Allentown, Pennsylvania.

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.