TECO Energy (NYSE: TE) and Calpine (NYSE:CPN) are both mid-cap utilities companies, but which is the better investment? We will contrast the two companies based on the strength of their analyst recommendations, earnings, institutional ownership, profitability, valuation, dividends and risk.
This table compares TECO Energy and Calpine’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
Institutional and Insider Ownership
78.4% of Calpine shares are held by institutional investors. 1.2% of Calpine shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.
TECO Energy pays an annual dividend of $0.92 per share and has a dividend yield of 3.3%. Calpine does not pay a dividend. TECO Energy pays out 86.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Calpine has increased its dividend for 3 consecutive years.
Earnings & Valuation
This table compares TECO Energy and Calpine’s gross revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Calpine||$8.75 billion||0.63||-$339.00 million||($0.96)||-15.89|
TECO Energy has higher earnings, but lower revenue than Calpine. Calpine is trading at a lower price-to-earnings ratio than TECO Energy, indicating that it is currently the more affordable of the two stocks.
This is a summary of current ratings and target prices for TECO Energy and Calpine, as reported by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
Calpine has a consensus price target of $14.47, suggesting a potential downside of 5.12%. Given Calpine’s higher possible upside, analysts plainly believe Calpine is more favorable than TECO Energy.
Calpine beats TECO Energy on 7 of the 13 factors compared between the two stocks.
About TECO Energy
TECO Energy, Inc. (TECO Energy) is a holding company for regulated utilities and other businesses. TECO Energy holds all of the common stock of Tampa Electric Company (TEC) and through its subsidiary, New Mexico Gas Intermediate, Inc. (NMGI), owns New Mexico Gas Company, Inc. (NMGC). The Company’s segments include Tampa Electric, Peoples Gas System (PGS) and NMGC. Its Tampa Electric division is engaged in the generation, purchase, transmission, distribution and sale of electric energy. The retail territory served comprises an area of approximately 2,000 square miles in West Central Florida. PGS, the gas division of TEC, is engaged in the purchase, distribution and sale of natural gas for residential, commercial, industrial and electric power generation customers in the state of Florida. NMGC is engaged in the purchase, distribution and sale of natural gas for residential, commercial and industrial customers in the state of New Mexico.
Calpine Corporation is a power generation company. The Company is engaged in the ownership and operation of primarily natural gas-fired and geothermal power plants in North America. The Company’s segments include West (including geothermal), Texas and East (including Canada). In the Northeast and Mid-Atlantic regions, the Company has generating units capable of burning either natural gas or fuel oil. As of December 31, 2016, the Company’s portfolio consisted of two types of power generation technologies, including natural gas-fired combustion turbines, such as combined-cycle plants, and renewable geothermal conventional steam turbines. As of December 31, 2016, the Company’s portfolio included 80 power plants, including one under construction, with an aggregate generation capacity of 25,908 Megawatt (MW) and 828 MW under construction. As of December 31, 2016, it had four MW of capacity from solar power generation technology at its Vineland Solar Energy Center in New Jersey.
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