SCANA (NYSE: SCG) and American Electric Power (NYSE:AEP) are both utilities companies, but which is the better stock? We will compare the two companies based on the strength of their valuation, earnings, institutional ownership, profitability, dividends, risk and analyst recommendations.
This table compares SCANA and American Electric Power’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|American Electric Power||12.39%||10.05%||2.86%|
This is a breakdown of current ratings and recommmendations for SCANA and American Electric Power, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|American Electric Power||0||5||9||0||2.64|
SCANA presently has a consensus price target of $54.07, indicating a potential upside of 34.47%. American Electric Power has a consensus price target of $74.23, indicating a potential upside of 9.47%. Given SCANA’s higher probable upside, analysts plainly believe SCANA is more favorable than American Electric Power.
SCANA pays an annual dividend of $2.45 per share and has a dividend yield of 6.1%. American Electric Power pays an annual dividend of $2.48 per share and has a dividend yield of 3.7%. SCANA pays out -295.2% of its earnings in the form of a dividend. American Electric Power pays out 64.8% 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. SCANA has raised its dividend for 5 consecutive years and American Electric Power has raised its dividend for 18 consecutive years. SCANA is clearly the better dividend stock, given its higher yield and lower payout ratio.
Volatility and Risk
SCANA has a beta of 0.21, meaning that its stock price is 79% less volatile than the S&P 500. Comparatively, American Electric Power has a beta of 0.22, meaning that its stock price is 78% less volatile than the S&P 500.
Institutional & Insider Ownership
75.9% of SCANA shares are held by institutional investors. Comparatively, 71.7% of American Electric Power shares are held by institutional investors. 0.4% of SCANA shares are held by insiders. Comparatively, 0.2% of American Electric Power shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.
Earnings and Valuation
This table compares SCANA and American Electric Power’s gross revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|SCANA||$4.41 billion||1.30||-$119.00 million||($0.83)||-48.45|
|American Electric Power||$15.40 billion||2.17||$1.91 billion||$3.83||17.70|
American Electric Power has higher revenue and earnings than SCANA. SCANA is trading at a lower price-to-earnings ratio than American Electric Power, indicating that it is currently the more affordable of the two stocks.
American Electric Power beats SCANA on 10 of the 17 factors compared between the two stocks.
SCANA Corporation is a holding company. The Company, through its subsidiaries, is engaged in the generation, transmission, distribution and sale of electricity in South Carolina. The Company operates through segments, including Electric Operations, Gas Distribution, Gas Marketing and All Other. The Company is engaged in the purchase, transmission and sale of natural gas in North Carolina and South Carolina. The Electric Operations segment generates, transmits and distributes electricity. The Company’s regulated businesses include subsidiaries, such as South Carolina Electric & Gas Company (SCE&G), South Carolina Fuel Company, Inc. (Fuel Company), South Carolina Generating Company, Inc. (GENCO) and Public Service Company of North Carolina, Incorporated (PSNC Energy). The Company’s nonregulated businesses include subsidiaries, such as SCANA Energy Marketing, Inc. (SCANA Energy), ServiceCare, Inc., SCANA Services, Inc. and SCANA Corporate Security Services, Inc.
About American Electric Power
American Electric Power Company, Inc. (AEP) is a public utility holding company that owns, directly or indirectly, all of the outstanding common stock of its public utility subsidiaries and varying percentages of other subsidiaries. The service areas of the Company’s public utility subsidiaries cover the states of Arkansas, Indiana, Kentucky, Louisiana, Michigan, Ohio, Oklahoma, Tennessee, Texas, Virginia and West Virginia. The Company’s segments include Vertically Integrated Utilities, Transmission and Distribution Utilities, AEP Transmission Holdco, and Generation & Marketing. AEP’s vertically integrated utility operations are engaged in the generation, transmission and distribution of electricity for sale to retail and wholesale customers. Transmission and Distribution Utilities segment consists of the transmission and distribution of electricity for sale to retail and wholesale customers. AEP Transmission Holdco develops, constructs and operates transmission facilities.
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