Financial Review: Companhia Paranaense de Energia (NYSE:ELP) and Pattern Energy Group (NYSE:PEGI)

Companhia Paranaense de Energia (NYSE:ELP) and Pattern Energy Group (NASDAQ:PEGI) are both mid-cap utilities companies, but which is the superior stock? We will compare the two companies based on the strength of their earnings, analyst recommendations, profitability, institutional ownership, valuation, risk and dividends.

Profitability

This table compares Companhia Paranaense de Energia and Pattern Energy Group’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Companhia Paranaense de Energia 11.57% 9.37% 4.40%
Pattern Energy Group -5.73% -1.52% -0.53%

Risk and Volatility

Companhia Paranaense de Energia has a beta of 0.48, indicating that its share price is 52% less volatile than the S&P 500. Comparatively, Pattern Energy Group has a beta of 1.05, indicating that its share price is 5% more volatile than the S&P 500.

Insider and Institutional Ownership

0.9% of Companhia Paranaense de Energia shares are held by institutional investors. Comparatively, 80.6% of Pattern Energy Group shares are held by institutional investors. 1.8% of Pattern Energy Group shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Companhia Paranaense de Energia and Pattern Energy Group, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Companhia Paranaense de Energia 0 2 3 0 2.60
Pattern Energy Group 1 6 0 0 1.86

Pattern Energy Group has a consensus price target of $25.94, suggesting a potential downside of 3.00%. Given Pattern Energy Group’s higher probable upside, analysts plainly believe Pattern Energy Group is more favorable than Companhia Paranaense de Energia.

Earnings & Valuation

This table compares Companhia Paranaense de Energia and Pattern Energy Group’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Companhia Paranaense de Energia $3.92 billion 0.77 $384.97 million $1.35 8.15
Pattern Energy Group $541.00 million 4.85 -$31.00 million ($0.35) -76.40

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

Dividends

Companhia Paranaense de Energia pays an annual dividend of $0.49 per share and has a dividend yield of 4.5%. Pattern Energy Group pays an annual dividend of $1.69 per share and has a dividend yield of 6.3%. Companhia Paranaense de Energia pays out 36.3% of its earnings in the form of a dividend. Pattern Energy Group pays out -482.9% 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. Pattern Energy Group has increased its dividend for 4 consecutive years. Pattern Energy Group is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

Companhia Paranaense de Energia beats Pattern Energy Group on 9 of the 17 factors compared between the two stocks.

About Companhia Paranaense de Energia

Companhia Paranaense de Energia – COPEL engages in the generation, transmission, distribution, and sale of electricity to industrial, residential, commercial, rural, and other customers primarily in the State of Paraná, Brazil. As of December 31, 2017, the company operated 17 hydroelectric plants, 12 wind plants, and 1 thermoelectric plant with a total installed capacity of 5,024.0 megawatts; and owned and operated 2,698.3 kilometers of transmission lines and 196,951.2 kilometers of distribution lines. It holds concessions to distribute electricity in 394 municipalities in the State of Paraná and in the municipality of Porto União in the State of Santa Catarina. The company also provides telecommunication services to corporate clients, including supermarkets, universities, banks, Internet service providers, and television networks, as well as to retail clients; and broadband Internet access to public elementary and middle schools. In addition, it supplies piped gas to 39,377 customers, including thermoelectric plants, cogeneration plants, gas stations, other businesses, and residences through a gas distribution network covering 812 kilometers in the State of Paraná. Companhia Paranaense de Energia – COPEL was founded in 1954 and is headquartered in Curitiba, Brazil.

About Pattern Energy Group

Pattern Energy Group Inc. operates as an integrated renewable energy company. The company operates in two segments, Operating Business and Development Business. The Operating Business segment holds interest in 24 renewable energy projects with an operating capacity that totals approximately 4 gigawatts located in the United States, Canada, and Japan. The Development Business segment develops and sells renewable energy projects focusing on wind, solar, storage, and transmission primarily in the United States, Canada, Japan,and Mexico. Pattern Energy Group Inc. sells electricity and renewable energy credits primarily to local utilities and local liquid independent system organizations markets. The company was founded in 2012 and is headquartered in San Francisco, California.

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