Critical Comparison: DTE Energy (DTE) and UNITIL (UTL)

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

Profitability

This table compares UNITIL and DTE Energy’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
UNITIL 7.09% 9.39% 2.45%
DTE Energy 8.01% 9.56% 2.84%

Earnings and Valuation

This table compares UNITIL and DTE Energy’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
UNITIL $383.40 million 1.87 $27.10 million $2.00 25.37
DTE Energy $10.63 billion 1.93 $868.00 million $5.46 20.94

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

Insider and Institutional Ownership

60.7% of UNITIL shares are held by institutional investors. Comparatively, 68.4% of DTE Energy shares are held by institutional investors. 2.5% of UNITIL shares are held by company insiders. Comparatively, 0.5% of DTE Energy shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Volatility & Risk

UNITIL has a beta of 0.2, suggesting that its stock price is 80% less volatile than the S&P 500. Comparatively, DTE Energy has a beta of 0.23, suggesting that its stock price is 77% less volatile than the S&P 500.

Analyst Ratings

This is a summary of current recommendations and price targets for UNITIL and DTE Energy, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
UNITIL 0 1 0 0 2.00
DTE Energy 1 3 3 0 2.29

UNITIL currently has a consensus target price of $47.00, suggesting a potential downside of 7.37%. DTE Energy has a consensus target price of $112.43, suggesting a potential downside of 1.68%. Given DTE Energy’s stronger consensus rating and higher probable upside, analysts clearly believe DTE Energy is more favorable than UNITIL.

Dividends

UNITIL pays an annual dividend of $1.44 per share and has a dividend yield of 2.8%. DTE Energy pays an annual dividend of $3.30 per share and has a dividend yield of 2.9%. UNITIL pays out 72.0% of its earnings in the form of a dividend. DTE Energy pays out 60.4% 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. UNITIL has increased its dividend for 5 consecutive years and DTE Energy has increased its dividend for 2 consecutive years. DTE Energy is clearly the better dividend stock, given its higher yield and lower payout ratio.

Summary

DTE Energy beats UNITIL on 14 of the 17 factors compared between the two stocks.

About UNITIL

Unitil Corporation is a public utility holding company. The Company’s principal business is the local distribution of electricity in the southeastern seacoast and state capital regions of New Hampshire and the greater Fitchburg area of north central Massachusetts and the local distribution of natural gas in southeastern New Hampshire, portions of southern Maine to the Lewiston-Auburn area and in the greater Fitchburg area of north central Massachusetts. Its segments include utility gas operations, utility electric operations and non-regulated. Its operations include natural gas operations; natural gas distribution utility operations; gas transmission pipeline operations; electric distribution utility operations, and non-regulated and other non-utility operations. As of December 31, 2016, it was engaged in the distribution of electricity and natural gas to approximately 184,200 customers throughout its service territories in the states of New Hampshire, Massachusetts and Maine.

About DTE Energy

DTE Energy Company is an energy company. Its segments include Electric, which consists of DTE Electric Company, which is engaged in the generation, purchase, distribution and sale of electricity to residential, commercial and industrial customers in southeastern Michigan; Gas, which consists of DTE Gas Company, which is engaged in the purchase, storage, transportation, distribution and sale of natural gas to residential, commercial and industrial customers throughout Michigan; Gas Storage and Pipelines, which consists of natural gas pipeline, gathering and storage businesses; Power and Industrial Projects, which consists of projects that deliver energy and utility-type products and services to industrial, commercial and institutional customers, and sell electricity from renewable energy projects; Energy Trading, which consists of energy marketing and trading operations, and Corporate and Other, which includes various holding company activities and holds certain non-utility debt.

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