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ETR or EIX: Which Is a Better Electric Utility Stock Now?

Zacks Equity Research

Generally regulated and domestic-focused electric utilities provide basic services. These stocks are also independent of market volatility. It providesinvestors with stable earnings and performance along with consistent cash rewards.

Electric utility operators make regular investments to upgrade and strengthen existing electricity transmission as well as distribution networks. To keep up with the modernization trend, these companies are investing in technologies that include smart meters and drones.

These technologies help to lower indirect cost of the companies by reducing manpower. Additionally, considering the environmental awareness, utility electric power companies are increasingly shifting to cleaner sources of production and trying to reduce usage of coal.

Though rate hikes limit the ability to pay dividends and buy back shares, it is safe to invest in electric utility socks as the usage of electric is a stable factor that leads to steady demand.

In this article, we conduct a comparative analysis of two electric power utilities — Edison International EIX and Entergy Corp. ETR — to ascertain the better stock.

Edison International, carrying a Zacks Rank #3 (Hold), has a market capitalization of around $20.80 billion. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Entergy, carrying a Zacks Rank #3, has a market capitalization of $17.91 billion.

Price Movement

In the past 12 months, shares of Edison International have returned 0.6% compared with the industry’s rise of 13.4% and Entergy’s return of 20.3%. 

 

Surprise Trend and Estimate Revision

Edison International pulled off an average positive earnings surprise of 1.10% in the last four quarters. Entergy delivered an average positive earnings surprise of 22.21% in the last four quarters.

In the past 30 days, the Zacks Consensus Estimate for Entergy’s 2019 earnings rose 0.3% to $5.51 per share and the same for Edison International were unchanged at $ 4.53 per share.

Return on Equity (ROE)

ROE is a measure of a company’s efficiency in utilizing shareholders’ funds. ROE for the trailing 12-months for Edison International and Entergy is 10.47% and 16.22%, respectively. The industry’s ROE is pegged at 9.18%.

Dividend Yield

Currently, dividend yield for Edison International is at 3.84%, lower than Entergy’s tally of 3.85%.

 The Verdict

Our comparative analysis shows that Entergy holds an edge over Edison International almost in every parameter. It is clear that Entergy is a better utility stock than Edison International right now.

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Edison International (EIX) : Free Stock Analysis Report
 
Entergy Corporation (ETR) : Free Stock Analysis Report
 
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