Pinnacle West Capital Corporation (NYSE: PNW) and ITC Holdings Corp. (NYSE:ITC) are both utilities companies, but which is the superior business? We will compare the two companies based on the strength of their earnings, profitability, analyst recommendations, institutional ownership, risk, valuation and dividends.
Pinnacle West Capital Corporation pays an annual dividend of $2.62 per share and has a dividend yield of 3.1%. ITC Holdings Corp. pays an annual dividend of $0.86 per share and has a dividend yield of 1.9%. Pinnacle West Capital Corporation pays out 58.0% of its earnings in the form of a dividend. ITC Holdings Corp. pays out 55.8% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Pinnacle West Capital Corporation has raised its dividend for 5 consecutive years and ITC Holdings Corp. has raised its dividend for 5 consecutive years.
This table compares Pinnacle West Capital Corporation and ITC Holdings Corp.’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Pinnacle West Capital Corporation||14.37%||10.20%||3.14%|
|ITC Holdings Corp.||26.73%||16.53%||3.82%|
This is a summary of current recommendations and price targets for Pinnacle West Capital Corporation and ITC Holdings Corp., as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Pinnacle West Capital Corporation||1||8||0||0||1.89|
|ITC Holdings Corp.||0||1||0||0||2.00|
Pinnacle West Capital Corporation presently has a consensus price target of $84.00, indicating a potential downside of 2.10%. Given Pinnacle West Capital Corporation’s higher possible upside, analysts plainly believe Pinnacle West Capital Corporation is more favorable than ITC Holdings Corp..
Earnings and Valuation
This table compares Pinnacle West Capital Corporation and ITC Holdings Corp.’s top-line revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Pinnacle West Capital Corporation||$3.53 billion||2.71||$1.53 billion||$4.52||18.98|
|ITC Holdings Corp.||N/A||N/A||N/A||$1.54||29.55|
Pinnacle West Capital Corporation has higher revenue and earnings than ITC Holdings Corp.. Pinnacle West Capital Corporation is trading at a lower price-to-earnings ratio than ITC Holdings Corp., indicating that it is currently the more affordable of the two stocks.
Insider and Institutional Ownership
84.2% of Pinnacle West Capital Corporation shares are held by institutional investors. Comparatively, 84.2% of ITC Holdings Corp. shares are held by institutional investors. 0.7% of Pinnacle West Capital Corporation shares are held by insiders. Comparatively, 3.2% of ITC Holdings Corp. shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.
ITC Holdings Corp. beats Pinnacle West Capital Corporation on 7 of the 11 factors compared between the two stocks.
About Pinnacle West Capital Corporation
Pinnacle West Capital Corporation is a holding company that operates through its subsidiaries. The Company operates through regulated electricity segment, which consists of traditional regulated retail and wholesale electricity businesses and related activities, and includes electricity generation, transmission and distribution. It owned and leased 6,236 megawatt (MW) of regulated generation capacity and the Company held a mix of both long-term and short-term purchased power agreements for additional capacity, including agreements for the purchase of renewable energy, as of December 31, 2016. Its subsidiaries include Arizona Public Service Company, which is a vertically-integrated electric utility that provides retail or wholesale electric service to the State of Arizona, with the exceptions of about one-half of the Phoenix metropolitan area, the Tucson metropolitan area and Mohave County in northwestern Arizona.
About ITC Holdings Corp.
ITC Holdings Corp. (ITC Holdings) is a holding company. The Company is engaged in owning, operating, maintaining and investing in transmission infrastructure. The Company’s business consists primarily of the electric transmission operations of its Regulated Operating Subsidiaries. Its Regulated Operating Subsidiaries include International Transmission Company (ITCTransmission), Michigan Electric Transmission Company, LLC (METC), ITC Midwest LLC (ITC Midwest). The operations performed by its Regulated Operating Subsidiaries fall into the various categories, such as asset planning; engineering, design and construction; maintenance, and real time operations. Its customers include investor-owned utilities, municipalities, cooperatives, power marketers and alternative energy suppliers. It owns and operates high-voltage systems in Michigan’s Lower Peninsula and portions of Iowa, Minnesota, Illinois, Missouri, Kansas and Oklahoma.
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