Analyzing PNM Resources (NYSE:PNM) and UNS Energy (UNS)

UNS Energy (NYSE: UNS) and PNM Resources (NYSE:PNM) are both utilities companies, but which is the better investment? We will contrast the two companies based on the strength of their profitability, institutional ownership, analyst recommendations, risk, valuation, earnings and dividends.

Profitability

This table compares UNS Energy and PNM Resources’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
UNS Energy N/A N/A N/A
PNM Resources 11.27% 9.18% 2.49%

Valuation and Earnings

This table compares UNS Energy and PNM Resources’ revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
UNS Energy N/A N/A N/A N/A N/A
PNM Resources $1.36 billion 2.36 $117.37 million $1.99 20.33

PNM Resources has higher revenue and earnings than UNS Energy.

Institutional & Insider Ownership

92.2% of PNM Resources shares are held by institutional investors. 1.3% of PNM Resources shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Dividends

PNM Resources pays an annual dividend of $0.97 per share and has a dividend yield of 2.4%. UNS Energy does not pay a dividend. PNM Resources pays out 48.7% of its earnings in the form of a dividend. UNS Energy has raised its dividend for 5 consecutive years.

Analyst Ratings

This is a breakdown of current ratings and recommmendations for UNS Energy and PNM Resources, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
UNS Energy 0 0 1 0 3.00
PNM Resources 4 7 1 0 1.75

UNS Energy presently has a consensus target price of $33.00, indicating a potential upside of Infinity. PNM Resources has a consensus target price of $39.08, indicating a potential downside of 3.38%. Given UNS Energy’s stronger consensus rating and higher probable upside, analysts clearly believe UNS Energy is more favorable than PNM Resources.

Summary

PNM Resources beats UNS Energy on 7 of the 11 factors compared between the two stocks.

UNS Energy Company Profile

UNS Energy Corporation, formerly UniSource Energy Corporation, is a holding company. The Company owns the outstanding common stock of Tucson Electric Power Company (TEP), UniSource Energy Services, Inc. (UES), UniSource Energy Development Company (UED), and Millennium Energy Holdings, Inc. (Millennium). It operates in three segments: TEP, UNS Gas, Inc. (UNS Gas) and UNS Electric, Inc. (UNS Electric). TEP is an electric utility serving the community of Tucson, Arizona. UNS Gas is a gas distribution company serving approximately 148,000 retail customers in Mohave, Yavapai, Coconino, and Navajo counties in northern Arizona, as well as Santa Cruz County in southeastern Arizona. UNS Electric is a vertically integrated electric utility company serving approximately 91,000 retail customers in Mohave and Santa Cruz counties. In July 2011, UNS Electric purchased the Black Mountain Generating Station (BMGS) from UED.

PNM Resources Company Profile

PNM Resources, Inc. (PNMR) is an investor-owned holding company with approximately two regulated utilities providing electricity and electric services in New Mexico and Texas. PNMR’s electric utilities are Public Service Company of New Mexico (PNM) and Texas-New Mexico Power Company (TNMP). It operates in three segments: PNM, TNMP, and Corporate and Other. The Company, through its Website provides information, including news releases, notices of Webcasts, and filings. PNM is an electric utility that provides electric generation, transmission and distribution service to its rate-regulated customers. TNMP is a regulated utility operating in Texas. TNMP provides transmission and distribution services in Texas under the provisions of Texas Electric Choice Act (TECA) and the Texas Public Utility Regulatory Act. The Corporate and Other segment includes PNMR holding company activities, related to corporate level debt and PNMR Services Company.

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