Within the realm of utilities, a perfect storm of advantageous factors like new electric rates, customer growth, and resilient infrastructure investments is fueling growth. The sector is undergoing a seismic shift towards zero-emission goals and widescale adoption of renewable energy projects, a testament to leaps in technological progress in the industry.
Amidst economic ebbs and flows, utilities, save for the occasional weather blip, see a unwavering demand for their services.
With the push towards embracing cleaner energy practices, it comes as no surprise that many companies have committed to achieving 100% clean energy and zero emissions in the near future.
According to the U.S. Energy Information Administration, renewable energy sources will power an increasing share of U.S. electricity, with a projected uptick in generation to 24% in 2024 and 25% in 2025.
Today, we delve into a head-to-head comparison between two prominent Zacks-featured Utility — Electric Power entities — Pinnacle West Capital Corporation (PNW) and NiSource (NI) — to ascertain which one holds the edge in your investment portfolio.
Both stocks currently sport a Zacks Rank #2 (Buy). For a full list of Zacks #1 Rank (Strong Buy) stocks, check here.
PNW boasts a market cap of $8.17 billion while NI clocks in at $12.07 billion.
The Growth Trajectory
Predictions paint a rosy picture for both entities. PNW is estimated to clock 2024 earnings at $4.80 per share from revenues of $4.87 billion, indicating a healthy 8.8% and 3.7% surge in bottom-line and top-line figures, respectively.
On the other hand, NI projects 2024 earnings at $1.71 per share over revenues of $6.14 billion, translating to a 6.9% growth in earnings and a robust 11.5% growth in revenues.
Return on Equity (ROE)
ROE, a litmus test for a company’s savvy usage of capital, pegs Pinnacle West Capital at 8.02%, slightly below NiSource’s respectable 10.11%, but still above the industry’s 8.82%.
Debt Dossier
Bringing us to the financial trenches, PNW and NI shoulder debt-to-capital ratios of 58.95% and 58.23%, respectively, outshining the industry average of 61.51%.
Both companies boast a TIE ratio above 1, signifying ample financial flexibility to honor their upcoming financial commitments.
Yielding Dividends
When it comes to shareholder perks, Pinnacle West Capital leads with a solid 4.89% dividend yield against NiSource’s 3.93%, both outstripping S&P 500 Composite’s 1.30% average.
Market Performance
Marking the recent past, NiSource’s shares ascended by 7.1% over the last six months, outpacing the industry’s 2.1% uptick. Meanwhile, PNW saw a 2.9% dip in the same period.
Image Source: Zacks Investment Research
The Verdict
Both powerhouses, PNW and NI, stand robust and merit consideration for your investment mix. Laden with potential and poised to cater to a burgeoning clientele, the choice, however, tips towards NI for its superior ROE, adept debt management, and a stronger price performance over PNW.
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The expressions and articulations in this narrative reflect the ideas of the author and not necessarily those of Nasdaq, Inc.
