Critical Comparison: Empire District Electric (EDE) & NiSource (NI)

Empire District Electric (NYSE: EDE) and NiSource (NYSE:NI) are both utilities companies, but which is the superior investment? We will contrast the two businesses based on the strength of their risk, institutional ownership, profitability, dividends, valuation, analyst recommendations and earnings.

Profitability

This table compares Empire District Electric and NiSource’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Empire District Electric 15.69% 13.50% 4.46%
NiSource 5.96% 9.17% 2.00%

Insider & Institutional Ownership

65.9% of Empire District Electric shares are owned by institutional investors. Comparatively, 82.0% of NiSource shares are owned by institutional investors. 0.7% of Empire District Electric shares are owned by company insiders. Comparatively, 0.4% of NiSource shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Dividends

Empire District Electric pays an annual dividend of $1.04 per share and has a dividend yield of 3.1%. NiSource pays an annual dividend of $0.70 per share and has a dividend yield of 2.6%. Empire District Electric pays out 75.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. NiSource pays out 81.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Empire District Electric is clearly the better dividend stock, given its higher yield and lower payout ratio.

Valuation & Earnings

This table compares Empire District Electric and NiSource’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Empire District Electric N/A N/A N/A $1.38 24.70
NiSource $4.75 billion 1.82 $1.40 billion $0.86 30.90

NiSource has higher revenue and earnings than Empire District Electric. Empire District Electric is trading at a lower price-to-earnings ratio than NiSource, indicating that it is currently the more affordable of the two stocks.

Risk & Volatility

Empire District Electric has a beta of 0.11, suggesting that its stock price is 89% less volatile than the S&P 500. Comparatively, NiSource has a beta of 0.36, suggesting that its stock price is 64% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent ratings and price targets for Empire District Electric and NiSource, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Empire District Electric 2 1 0 0 1.33
NiSource 0 6 7 0 2.54

Empire District Electric presently has a consensus price target of $18.33, suggesting a potential downside of 46.22%. NiSource has a consensus price target of $26.81, suggesting a potential upside of 0.91%. Given NiSource’s stronger consensus rating and higher possible upside, analysts plainly believe NiSource is more favorable than Empire District Electric.

Summary

Empire District Electric beats NiSource on 7 of the 13 factors compared between the two stocks.

Empire District Electric Company Profile

The Empire District Electric Company is a regulated utility company. The Company is engaged in the generation, purchase, transmission, distribution and sale of electricity. It provides services with in Missouri, Kansas, Oklahoma and Arkansas. The Company operates its businesses in three segments: electric, gas and other. As part of its electric segment, the Company provides water service to over three towns in Missouri. The Company through its subsidiary, The Empire District Gas Company (EDG), is engaged in the distribution of natural gas in Missouri. The Company’s other segment consists of fiber optics business. It supplies electric service at retail to approximately 120 incorporated communities and to various unincorporated areas, and at wholesale to over four municipally owned distribution systems. Its gas operations serve customers in northwest, north central and west central Missouri. It serves a group of customers, including residential, commercial and industrial customers.

NiSource Company Profile

NiSource Inc. is an energy holding company. The Company is engaged in the distribution of natural gas. The Company operates through two business segments: Gas Distribution Operations and Electric Operations. The Company’s Gas Distribution Operations segment provides natural gas service and transportation for residential, commercial and industrial customers in Ohio, Pennsylvania, Virginia, Kentucky, Maryland, Indiana and Massachusetts. As of December 31, 2016, the Company’s Electric Operations segment provided electric services in 20 counties in the northern part of Indiana. The Company’s electric operations segment generated, transmitted and distributed electricity through the Company’s subsidiary NIPSCO to approximately 466,000 customers in 20 counties in the northern part of Indiana and engaged in wholesale and transmission transactions, as of December 31, 2016. NIPSCO owned and operated three coal-fired electric generating stations, as of December 31, 2016.

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