Calpine Corporation (NYSE:CPN) and SCANA Corporation (NYSE:SCG) are both Utilities companies that recently hit new low. 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.
Calpine Corporation (NYSE:CPN) operates in the Electric Utilities segment of the Utilities sector. The company has grown sales at a -0.20% annual rate over the past five years, putting it in the low growth category. CPN has a net profit margin of -0.30% and is less profitable than the average company in the Electric Utilities industry. In terms of efficiency, CPN has an asset turnover ratio of 0.47. This figure represents the amount of revenue a company generates per dollar of assets. CPN’s financial leverage ratio is 4.08, which indicates that the company’s asset base is primarily funded by debt. Company’s return on equity, which is really just the product of the company’s profit margin, asset turnover, and financial leverage ratios, is -0.70%, which is worse than the Electric Utilities industry average ROE.
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 9.08. The average investment recommendation for CPN, taken from a group of Wall Street Analysts, is 2.80, or a hold.
Over the past three months, Calpine Corporation insiders have been net buyers, dumping a net of -5,470 shares. This implies that insiders have been feeling relatively bearish about the outlook for CPN. 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. CPN has a beta of 1.06 and therefore an above average level of market volatility.
SCANA Corporation (NYSE:SCG) operates in the Electric Utilities segment of the Utilities sector. SCG has increased sales at a -0.80% CAGR over the past five years, and is considered a low growth stock. The company has a net profit margin of 10.50% and is more profitable than the average Electric Utilities player. SCG’s asset turnover ratio is -0 and the company has financial leverage of 2.66. SCG’s return on equity of 7.80% is worse than the Electric Utilities industry average.
SCANA Corporation (SCG) pays a dividend of 2.45, which translates to dividend yield of 5.78% based on the current price. Stock has a payout ratio of 75.30%. According to this ratio, SCG should be able to continue making payouts at these levels. The company trades at a free cash flow yield of 0.19 and has a P/E of 13.43. Compared to the average company in the 14.69 space, SCG is relatively cheap. The average analyst recommendation for SCG is 3.10, or a hold.
SCANA Corporation insiders have bought a net of 1,995 shares during the past three months, which implies that the company’s top executives have been feeling bullish about the stock’s outlook. Finally, SCG’s beta of 0.22 indicates that the stock has an above average level of market risk.
Calpine Corporation (NYSE:SCG) scores higher than SCANA Corporation (NYSE:CPN) on 7 of the 13 measures compared between the two companies. SCG has the better fundamentals, scoring higher on profitability, leverage and return metrics. SCG has better insider activity and sentiment signals.