Financial Analysis: Alliant Energy (NASDAQ:LNT) & Edison International (NYSE:EIX)

Edison International (NYSE:EIX) and Alliant Energy (NASDAQ:LNT) are both large-cap utilities companies, but which is the better investment? We will compare the two companies based on the strength of their institutional ownership, profitability, valuation, analyst recommendations, dividends, earnings and risk.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Edison International	19.27%	14.56%	2.87%
Alliant Energy	18.58%	11.37%	3.38%

Dividends

Edison International pays an annual dividend of $3.51 per share and has a dividend yield of 4.4%. Alliant Energy pays an annual dividend of $2.14 per share and has a dividend yield of 2.9%. Edison International pays out 38.1% of its earnings in the form of a dividend. Alliant Energy pays out 67.1% 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. Edison International has raised its dividend for 23 consecutive years and Alliant Energy has raised its dividend for 22 consecutive years. Edison International is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Edison International and Alliant Energy, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Edison International	3	5	4	0	2.08
Alliant Energy	0	5	9	0	2.64

Edison International presently has a consensus price target of $72.64, suggesting a potential downside of 8.87%. Alliant Energy has a consensus price target of $77.09, suggesting a potential upside of 2.87%. Given Alliant Energy’s stronger consensus rating and higher probable upside, analysts plainly believe Alliant Energy is more favorable than Edison International.

Valuation and Earnings

This table compares Edison International and Alliant Energy”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Edison International	$19.32 billion	1.59	$4.70 billion	$9.21	8.65
Alliant Energy	$4.36 billion	4.44	$810.00 million	$3.19	23.49

Edison International has higher revenue and earnings than Alliant Energy. Edison International 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 and Institutional Ownership

89.0% of Edison International shares are owned by institutional investors. Comparatively, 79.9% of Alliant Energy shares are owned by institutional investors. 1.2% of Edison International shares are owned by company insiders. Comparatively, 0.3% of Alliant Energy shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Risk & Volatility

Edison International has a beta of 0.66, meaning that its stock price is 34% less volatile than the S&P 500. Comparatively, Alliant Energy has a beta of 0.55, meaning that its stock price is 45% less volatile than the S&P 500.

Summary

Edison International beats Alliant Energy on 11 of the 17 factors compared between the two stocks.

About Edison International

Edison International, through its subsidiaries, engages in the generation and distribution of electric power. The company supplies and delivers electricity to approximately 50,000 square mile area of southern California to residential, commercial, industrial, public authorities, agricultural, and other sectors. Its transmission facilities consist of lines ranging from 55 kV to 500 kV and approximately 80 transmission substations; distribution system consists of approximately 38,000 circuit-miles of overhead lines; approximately 31,000 circuit-miles of underground lines; and 730 distribution substations. The company was founded in 1886 and is based in Rosemead, California.

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.