Southern (NYSE:SO) and Atlantica Yield (NASDAQ:AY) are both utilities companies, but which is the better stock? We will compare the two companies based on the strength of their dividends, earnings, analyst recommendations, risk, profitability, valuation and institutional ownership.
Risk & Volatility
Southern has a beta of -0.05, meaning that its share price is 105% less volatile than the S&P 500. Comparatively, Atlantica Yield has a beta of 0.97, meaning that its share price is 3% less volatile than the S&P 500.
57.3% of Southern shares are held by institutional investors. Comparatively, 49.3% of Atlantica Yield shares are held by institutional investors. 0.7% of Southern shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.
This table compares Southern and Atlantica Yield’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
Southern pays an annual dividend of $2.40 per share and has a dividend yield of 5.2%. Atlantica Yield pays an annual dividend of $1.36 per share and has a dividend yield of 7.0%. Southern pays out 79.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Atlantica Yield pays out -755.6% of its earnings in the form of a dividend. Southern has increased its dividend for 16 consecutive years. Atlantica Yield is clearly the better dividend stock, given its higher yield and lower payout ratio.
This is a summary of recent recommendations and price targets for Southern and Atlantica Yield, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
Southern presently has a consensus target price of $45.88, suggesting a potential downside of 0.06%. Atlantica Yield has a consensus target price of $25.75, suggesting a potential upside of 31.71%. Given Atlantica Yield’s stronger consensus rating and higher possible upside, analysts clearly believe Atlantica Yield is more favorable than Southern.
Valuation & Earnings
This table compares Southern and Atlantica Yield’s gross revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Southern||$23.03 billion||2.02||$880.00 million||$3.02||15.20|
|Atlantica Yield||$1.01 billion||1.94||-$111.80 million||($0.18)||-108.61|
Southern has higher revenue and earnings than Atlantica Yield. Atlantica Yield is trading at a lower price-to-earnings ratio than Southern, indicating that it is currently the more affordable of the two stocks.
Southern beats Atlantica Yield on 11 of the 17 factors compared between the two stocks.
The Southern Company, through its subsidiaries, engages in the generation, transmission, and distribution of electricity. The company also constructs, acquires, owns, and manages power generation assets, including renewable energy facilities and sells electricity in the wholesale market; and distributes natural gas in Illinois, Georgia, Virginia, New Jersey, Florida, Tennessee, and Maryland, as well as provides gas marketing services, wholesale gas services, and gas midstream operations. It owns and/or operates 33 hydroelectric generating stations, 29 fossil fuel generating stations, 3 nuclear generating stations, 15 combined cycle/cogeneration stations, 35 solar facilities, 8 wind facilities, 1 biomass facility, and 1 landfill gas facility; and constructs, operates, and maintains 82,000 miles of natural gas pipelines and 14 storage facilities with total capacity of 158 Bcf to provide natural gas to residential, commercial, and industrial customers. The company has 46,000 megawatts of generating capacity and 1,500 billion cubic feet of combined natural gas consumption and throughput volume serving 9 million electric and gas utility customers. It also provides products and services in the areas of distributed generation infrastructure, energy efficiency, and utility infrastructure. In addition, the company offers digital wireless communications services with various communication options, including push to talk, cellular service, text messaging, wireless Internet access, and wireless data. The Southern Company was founded in 1945 and is headquartered in Atlanta, Georgia.
About Atlantica Yield
Atlantica Yield plc acquires, owns, and manages renewable energy natural gas, power, electric transmission lines, and water assets in North America, South America, Spain, Algeria, and South Africa. As of December 31, 2017, it had 22 assets, including 1,446 megawatts (MW) of renewable energy generation assets comprising solar power and wind plants; 300 MW of natural gas power generation assets that produce electricity and steam from natural gas; 1,099 miles of electric transmission lines; and desalination plants with an aggregate capacity of 10.5 million cubic feet per day. The company was formerly known as Abengoa Yield plc and changed its name to Atlantica Yield plc in May 2016. Atlantica Yield plc was incorporated in 2013 and is based in Brentford, the United Kingdom.
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