Financial Analysis: Kenon (KEN) & WEC Energy Group (WEC)

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

Dividends

WEC Energy Group pays an annual dividend of $2.08 per share and has a dividend yield of 3.1%. Kenon does not pay a dividend. WEC Energy Group pays out 68.4% of its earnings in the form of a dividend. Kenon has raised its dividend for 6 consecutive years.

Profitability

This table compares Kenon and WEC Energy Group’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Kenon -3.75% -7.28% -1.28%
WEC Energy Group 12.79% 10.62% 3.18%

Insider and Institutional Ownership

1.0% of Kenon shares are owned by institutional investors. Comparatively, 72.6% of WEC Energy Group shares are owned by institutional investors. 1.0% of WEC Energy Group shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Valuation & Earnings

This table compares Kenon and WEC Energy Group’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Kenon $1.87 billion 0.57 -$411.93 million ($1.50) -13.25
WEC Energy Group $7.47 billion 2.88 $940.20 million $3.04 22.42

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

Analyst Recommendations

This is a breakdown of recent ratings for Kenon and WEC Energy Group, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Kenon 0 0 0 0 N/A
WEC Energy Group 1 7 0 0 1.88

WEC Energy Group has a consensus price target of $64.71, indicating a potential downside of 5.07%. Given WEC Energy Group’s higher possible upside, analysts plainly believe WEC Energy Group is more favorable than Kenon.

Risk & Volatility

Kenon has a beta of 1.18, indicating that its stock price is 18% more volatile than the S&P 500. Comparatively, WEC Energy Group has a beta of 0.15, indicating that its stock price is 85% less volatile than the S&P 500.

Summary

WEC Energy Group beats Kenon on 11 of the 14 factors compared between the two stocks.

Kenon Company Profile

Kenon Holdings Ltd. is a holding company that operates primarily growth-oriented businesses. The Company’s segments include I.C. Power Asia Development Ltd (IC Power), Qoros Automotive Co., Ltd. (Qoros) and Other. I.C. Power, through its subsidiary companies, is engaged in the production, operation and sale of electricity in countries in Latin America, the Caribbean region and Israel. Qoros is an automotive company. Its other activities include shipping services and renewable energy businesses. The Company also holds interests in ZIM Integrated Shipping Services, Ltd. (ZIM), which is a provider of container shipping services, and Primus Green Energy, Inc. (Primus), which is a developer and owner of a natural gas-to-liquid technology process. IC Power is an owner, developer and operator of power generation facilities, and operates power distribution business. Qoros offers approximately three vehicle models, which include the Qoros 3 Sedan, the Qoros 3 Hatch and the Qoros 3 City SUV.

WEC Energy Group Company Profile

WEC Energy Group, Inc. was a diversified holding company with natural gas and electric utility operations, an approximately 60% equity ownership interest in American Transmission Company LLC, and non-utility electric operations through its We Power business, as of December 31, 2016. Its segments include Wisconsin; Illinois; Other States; Electric Transmission; We Power, and Corporate and Other. Wisconsin includes the electric and natural gas utility operations of Wisconsin Electric Power Company, Wisconsin Gas LLC, and Wisconsin Public Service Corporation, including WE’s and WPS’s electric and natural gas operations in the state of Michigan. Illinois includes the natural gas utility and non-utility operations of The Peoples Gas Light and Coke Company and North Shore Gas Company. Other states includes the natural gas utility and non-utility operations of Minnesota Energy Resources Corporation and Michigan Gas Utilities Corporation.

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