Analyzing Public Service Enterprise Group (NYSE:PEG) & Atlantica Yield PLC (ABY)

Public Service Enterprise Group (NYSE: PEG) and Atlantica Yield PLC (NASDAQ:ABY) are both mid-cap utilities companies, but which is the superior investment? We will contrast the two businesses based on the strength of their risk, valuation, institutional ownership, earnings, dividends, analyst recommendations and profitabiliy.

Dividends

Public Service Enterprise Group pays an annual dividend of $1.72 per share and has a dividend yield of 3.8%. Atlantica Yield PLC pays an annual dividend of $1.00 per share and has a dividend yield of 4.8%. Public Service Enterprise Group pays out 165.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Atlantica Yield PLC pays out 1,111.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Public Service Enterprise Group has raised its dividend for 5 consecutive years.

Analyst Ratings

This is a summary of recent recommendations for Public Service Enterprise Group and Atlantica Yield PLC, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Public Service Enterprise Group	0	5	5	0	2.50
Atlantica Yield PLC	0	1	2	1	3.00

Public Service Enterprise Group currently has a consensus price target of $46.63, indicating a potential upside of 4.26%. Atlantica Yield PLC has a consensus price target of $22.33, indicating a potential upside of 7.32%. Given Atlantica Yield PLC’s stronger consensus rating and higher probable upside, analysts clearly believe Atlantica Yield PLC is more favorable than Public Service Enterprise Group.

Insider & Institutional Ownership

66.2% of Public Service Enterprise Group shares are owned by institutional investors. Comparatively, 57.6% of Atlantica Yield PLC shares are owned by institutional investors. 0.6% of Public Service Enterprise Group 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.

Profitability

This table compares Public Service Enterprise Group and Atlantica Yield PLC’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Public Service Enterprise Group	5.86%	11.17%	3.74%
Atlantica Yield PLC	0.97%	0.48%	0.09%

Risk and Volatility

Public Service Enterprise Group has a beta of 0.38, indicating that its share price is 62% less volatile than the S&P 500. Comparatively, Atlantica Yield PLC has a beta of 1.12, indicating that its share price is 12% more volatile than the S&P 500.

Earnings and Valuation

This table compares Public Service Enterprise Group and Atlantica Yield PLC’s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	EBITDA	Earnings Per Share	Price/Earnings Ratio
Public Service Enterprise Group	$9.04 billion	2.50	$3.33 billion	$1.04	43.00
Atlantica Yield PLC	$970.02 million	2.15	$677.13 million	$0.09	231.22

Public Service Enterprise Group has higher revenue and earnings than Atlantica Yield PLC. Public Service Enterprise Group is trading at a lower price-to-earnings ratio than Atlantica Yield PLC, indicating that it is currently the more affordable of the two stocks.

Summary

Public Service Enterprise Group beats Atlantica Yield PLC on 12 of the 18 factors compared between the two stocks.

About Public Service Enterprise Group

Public Service Enterprise Group Incorporated (PSEG) is a holding company. The Company is an energy company with operations located primarily in the Northeastern and Mid-Atlantic United States. The Company’s segments include Public Service Electric and Gas Company (PSE&G), PSEG Power LLC (Power) and Other. PSEG is engaged in the transmission of electricity and distribution of electricity and natural gas in certain areas of New Jersey. PSE&G is also the provider of last resort for gas and electric commodity service for end users in its service territory. Power is a multi-regional energy supply company that integrates the operations of its merchant nuclear and fossil generating assets with its power marketing businesses through energy sales in energy markets and fuel supply functions primarily in the Northeast and Mid-Atlantic United States through its principal subsidiaries. In addition, Power owns and operates solar generation in various states.

About Atlantica Yield PLC

Atlantica Yield plc, formerly Abengoa Yield plc, is a total return company. The Company owns, manages, and acquires renewable energy, conventional power, electric transmission lines and water assets, focused on North America (the United States and Mexico), South America (Peru, Chile, Brazil and Uruguay) and Europe, Middle East and Africa (Spain, Algeria and South Africa). Its segments include North America, South America and EMEA. It operates in business sectors, including renewable energy, conventional power, electric transmission lines and water. As of December 31, 2016, it owned or had interests in 21 assets, comprising 1,442 megawatt (MW) of renewable energy generation, 300 MW of conventional power generation, 1,099 miles of electric transmission lines, as well as an exchangeable preferred equity investment in Abengoa Concessoes Brasil Holding S.A., (ACBH). The renewable energy sector includes its activities related to the production electricity from solar power and wind plants.