Dynegy (NYSE: DYN) and Duke Energy (NYSE:DUK) are both utilities companies, but which is the superior investment? We will contrast the two businesses based on the strength of their institutional ownership, dividends, analyst recommendations, profitability, risk, earnings and valuation.

Dividends

Duke Energy pays an annual dividend of $3.56 per share and has a dividend yield of 4.5%. Dynegy does not pay a dividend. Duke Energy pays out 117.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Dynegy has raised its dividend for 11 consecutive years.

Valuation & Earnings

This table compares Dynegy and Duke Energy’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Dynegy $4.32 billion 0.40 -$1.24 billion ($0.52) -23.00
Duke Energy $22.74 billion 2.43 $2.15 billion $3.03 26.04

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

Volatility & Risk

Dynegy has a beta of 1.9, indicating that its stock price is 90% more volatile than the S&P 500. Comparatively, Duke Energy has a beta of 0.26, indicating that its stock price is 74% less volatile than the S&P 500.

Profitability

This table compares Dynegy and Duke Energy’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Dynegy -0.22% -17.98% -2.46%
Duke Energy 9.09% 7.54% 2.31%

Analyst Recommendations

This is a summary of recent ratings for Dynegy and Duke Energy, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Dynegy 0 4 5 0 2.56
Duke Energy 1 11 2 0 2.07

Dynegy presently has a consensus target price of $13.01, suggesting a potential upside of 8.80%. Duke Energy has a consensus target price of $87.25, suggesting a potential upside of 10.58%. Given Duke Energy’s higher possible upside, analysts clearly believe Duke Energy is more favorable than Dynegy.

Institutional & Insider Ownership

57.3% of Duke Energy shares are held by institutional investors. 1.8% of Dynegy shares are held by insiders. Comparatively, 0.1% of Duke Energy shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Summary

Duke Energy beats Dynegy on 11 of the 17 factors compared between the two stocks.

Dynegy Company Profile

Dynegy Inc. (Dynegy) is a holding company and conducts the business operations through its subsidiaries. The primary business of Dynegy is the production and sale of electric energy, capacity and ancillary services from the fleet of 18 operating power plants in six states totaling approximately 12,300 megawatt (MW) of generating capacity. Dynegy sells electric energy, capacity and ancillary services on a wholesale basis from its power generation facilities. Its customers include Regional Transmission Organization (RTOs) and Independent System Operators (ISOs), integrated utilities, municipalities, electric cooperatives, transmission and distribution utilities, industrial customers, power marketers, financial participants, such as banks and hedge funds, other power generators and commercial end-users. It has three segments: Midwest segment (GEN-MW), West segment (GEN-WE) and Northeast segment (GEN-NE). Its wholly owned subsidiary is Dynegy Holdings Inc. (DHI).

Duke Energy Company Profile

Duke Energy Corporation (Duke Energy) is an energy company. The Company operates through three segments: Electric Utilities and Infrastructure; Gas Utilities and Infrastructure, and Commercial Renewables. The Company operates in the United States through its direct and indirect subsidiaries. The Electric Utilities and Infrastructure segment provides retail electric service through the generation, transmission, distribution and sale of electricity to approximately 7.5 million customers within the Southeast and Midwest regions of the United States. The operations include electricity sold wholesale to municipalities, electric cooperative utilities and other load-serving entities. The Gas Utilities and Infrastructure segment serves residential, commercial, industrial and power generation natural gas customers. The Commercial Renewables primarily acquires, builds, develops and operates wind and solar renewable generation throughout the continental United States.

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