Great Plains Energy Incorporated (NYSE:GXP) and Vistra Energy Corp. (NYSE:VST) are both Utilities companies that recently hit new highs. Naturally, this has caught the attention of the investment community. But which is the better investment? To answer this question, we will compare the two companies across various metrics including growth, profitability, risk, return, dividends, and valuation.
Great Plains Energy Incorporated (NYSE:GXP) operates in the Electric Utilities segment of the Utilities sector. The company has grown sales at a 2.90% annual rate over the past five years, putting it in the low growth category. GXP has a net profit margin of 1.50% and is more profitable than the average company in the Electric Utilities industry. In terms of efficiency, GXP has an asset turnover ratio of 0.21. This figure represents the amount of revenue a company generates per dollar of assets. GXP’s financial leverage ratio is 1.43, which indicates that the company’s asset base is primarily funded by equity capital. Company’s return on equity, which is really just the product of the company’s profit margin, asset turnover, and financial leverage ratios, is 0.80%, which is worse than the Electric Utilities industry average ROE.
Great Plains Energy Incorporated (GXP) pays out an annual dividend of 1.10 per share. At the current valuation, this equates to a dividend yield of 3.17%. The company has a payout ratio of 587.90%. GXP’s current dividend therefore should be sustainable. Stock’s free cash flow yield, which represents the amount of cash available to investors before dividends, expressed as a percentage of the stock price, is 2.13. All else equal, companies with higher FCF yields are viewed as cheaper. Company trades at a P/E ratio of 186.56 , and is more expensive than the average stock in the Electric Utilities industry. The average investment recommendation for GXP, taken from a group of Wall Street Analysts, is 1.90, or a buy.
Over the past three months, Great Plains Energy Incorporated insiders have been net buyers, dumping a net of -38,240 shares. This implies that insiders have been feeling relatively bearish about the outlook for GXP. Insider activity and sentiment signals are important to monitor because they can shed light on how “risky” a stock is perceived to be at it’s current valuation. Knowing this, it makes sense to look at beta, a measure of market risk. GXP has a beta of 0.47 and therefore an below average level of market volatility.
Vistra Energy Corp. (NYSE:VST) operates in the Electric Utilities segment of the Utilities sector. VST’s return on equity of 352.30% is better than the Electric Utilities industry average.
Stock has a payout ratio of 0.00%. According to this ratio, VST should be able to continue making payouts at these levels. The company trades at a free cash flow yield of 1.44 and has a P/E of 0.33. Compared to the average company in the 14.36 space, VST is relatively cheap. The average analyst recommendation for VST is 2.00, or a buy.
Vistra Energy Corp. insiders have bought a net of 155,872 shares during the past three months, which implies that the company’s top executives have been feeling bullish about the stock’s outlook.
Great Plains Energy Incorporated (NYSE:GXP) scores higher than Vistra Energy Corp. (NYSE:VST) on 7 of the 13 measures compared between the two companies. GXP has the better fundamentals, scoring higher on growth, profitability and efficiency metrics.