NI or PPL: Which Is a Better Utility Electric Power Stock?

Core Insights - Utility companies in the U.S. are enhancing their infrastructure for electricity generation, transmission, distribution, storage, and sales to customers [1] Industry Overview - The utility sector benefits from favorable factors such as new electric rates, customer additions, cost management, and energy-efficiency programs [3] - Demand for utility services remains steady across economic cycles, barring major weather variations [4] - The U.S. electric power sector is transitioning towards cleaner energy sources, with renewable energy expected to account for 23% of electricity generation in 2024 and 25% in 2025 [13] Company Comparisons - A comparative analysis of NiSource (NI) and PPL Corporation (PPL) indicates both are strong picks for investment [2][11] - NiSource has a market capitalization of $13.75 billion, while PPL's market cap is $21.19 billion [14] Financial Performance - The Zacks Consensus Estimate for PPL's 2024 earnings is $1.71 per share on revenues of $8.77 billion, reflecting a 6.9% growth in earnings and a 5.5% increase in revenue year-over-year [6] - NiSource's 2024 earnings estimate is $1.72 per share on revenues of $5.6 billion, indicating a 7.5% growth in earnings and a 1.7% revenue increase year-over-year [15] - NiSource's shares have risen 9.3% in the past month, while PPL's shares increased by 2.4% [7] Key Ratios - NiSource has a Return on Equity (ROE) of 9.56%, while PPL's ROE is 8.8%, both above the sector average of 9.53% [17] - The times interest earned (TIE) ratio for NiSource is 2.7, and for PPL, it is 2.4, indicating both companies can meet near-term debt obligations [8] - PPL's current ratio is 1.28, surpassing the industry average of 0.85, while NiSource's current ratio is 0.66 [9] - The debt-to-capital ratios for NiSource and PPL are 56.98% and 53.3%, respectively, compared to the industry's 60.61% [18] Dividend Information - NiSource has a dividend yield of 3.46%, while PPL's yield is 3.59%, both higher than the S&P 500 composite average of 1.25% [10]