AES (NYSE:AES) versus Alliant Energy (NASDAQ:LNT) Critical Comparison

AES (NYSE:AES) and Alliant Energy (NASDAQ:LNT) are both large-cap utilities companies, but which is the superior business? We will contrast the two businesses based on the strength of their dividends, earnings, profitability, institutional ownership, analyst recommendations, valuation and risk.

Analyst Ratings

This is a breakdown of current recommendations and price targets for AES and Alliant Energy, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
AES	0	8	2	0	2.20
Alliant Energy	0	3	9	0	2.75

AES presently has a consensus target price of $24.09, indicating a potential upside of 67.41%. Alliant Energy has a consensus target price of $75.44, indicating a potential upside of 4.35%. Given AES’s higher possible upside, analysts clearly believe AES is more favorable than Alliant Energy.

Valuation and Earnings

This table compares AES and Alliant Energy”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
AES	$12.23 billion	0.84	$910.00 million	$1.26	11.42
Alliant Energy	$4.36 billion	4.28	$810.00 million	$3.15	22.95

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

Insider & Institutional Ownership

93.1% of AES shares are owned by institutional investors. Comparatively, 79.9% of Alliant Energy shares are owned by institutional investors. 0.8% of AES shares are owned by insiders. Comparatively, 0.3% of Alliant Energy shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Dividends

AES pays an annual dividend of $0.70 per share and has a dividend yield of 4.9%. Alliant Energy pays an annual dividend of $2.14 per share and has a dividend yield of 3.0%. AES pays out 55.6% of its earnings in the form of a dividend. Alliant Energy pays out 67.9% 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. AES has raised its dividend for 12 consecutive years and Alliant Energy has raised its dividend for 22 consecutive years. AES is clearly the better dividend stock, given its higher yield and lower payout ratio.

Profitability

This table compares AES and Alliant Energy’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
AES	7.40%	19.93%	3.29%
Alliant Energy	18.57%	11.51%	3.45%

Risk & Volatility

AES has a beta of 1.03, suggesting that its share price is 3% more volatile than the S&P 500. Comparatively, Alliant Energy has a beta of 0.61, suggesting that its share price is 39% less volatile than the S&P 500.

Summary

AES beats Alliant Energy on 9 of the 17 factors compared between the two stocks.

About AES

The AES Corporation, together with its subsidiaries, operates as a diversified power generation and utility company in the United States and internationally. The company owns and/or operates power plants to generate and sell power to customers, such as utilities, industrial users, and other intermediaries; owns and/or operates utilities to generate or purchase, distribute, transmit, and sell electricity to end-user customers in the residential, commercial, industrial, and governmental sectors; and generates and sells electricity on the wholesale market. It uses various fuels and technologies to generate electricity, such as coal, gas, hydro, wind, solar, and biomass, as well as renewables comprising energy storage and landfill gas. The company owns and/or operates a generation portfolio of approximately 34,596 megawatts and distributes power to 2.6 million customers. The company was formerly known as Applied Energy Services, Inc. and changed its name to The AES Corporation in April 2000. The AES Corporation was incorporated in 1981 and is headquartered in Arlington, Virginia.

About Alliant Energy

Alliant Energy Corporation operates as a utility holding company that provides regulated electricity and natural gas services in the United States. It operates in three segments: Utility Electric Operations, Utility Gas Operations, and Utility Other. The company, through its subsidiary, Interstate Power and Light Company (IPL), primarily generates and distributes electricity, and distributes and transports natural gas to retail customers in Iowa; sells electricity to wholesale customers in Minnesota, Illinois, and Iowa; and generates and distributes steam in Cedar Rapids, Iowa. Alliant Energy Corporation, through its other subsidiary, Wisconsin Power and Light Company (WPL), generates and distributes electricity, and distributes and transports natural gas to retail customers in Wisconsin; and sells electricity to wholesale customers in Wisconsin. It serves retail customers in the farming, agriculture, industrial manufacturing, chemical, packaging, and food industries, as well as wholesale customers comprising municipalities and rural electric cooperatives. In addition, the company owns and operates a short-line rail freight service in Iowa; a Mississippi River barge, rail, and truck freight terminal in Illinois; freight brokerage services; wind turbine blade recycling services; and a rail-served warehouse in Iowa. Further, it holds interests in a natural gas-fired electric generating unit near Sheboygan Falls, Wisconsin; and a wind farm located in Oklahoma. The company was formerly known as Interstate Energy Corp. and changed its name to Alliant Energy Corporation in May 1999. Alliant Energy Corporation was incorporated in 1981 and is headquartered in Madison, Wisconsin.