NorthWestern (NYSE:NWE – Get Free Report) and Ameren (NYSE:AEE – Get Free Report) are both utilities companies, but which is the superior stock? We will contrast the two businesses based on the strength of their analyst recommendations, valuation, dividends, risk, profitability, earnings and institutional ownership.
Analyst Recommendations
This is a breakdown of recent ratings and target prices for NorthWestern and Ameren, as provided by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| NorthWestern | 2 | 3 | 3 | 0 | 2.13 |
| Ameren | 0 | 4 | 5 | 0 | 2.56 |
NorthWestern presently has a consensus target price of $54.38, suggesting a potential upside of 11.08%. Ameren has a consensus target price of $88.78, suggesting a potential upside of 19.97%. Given Ameren’s stronger consensus rating and higher probable upside, analysts clearly believe Ameren is more favorable than NorthWestern.
Earnings and Valuation
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| NorthWestern | $1.51 billion | 1.99 | $183.01 million | $3.00 | 16.32 |
| Ameren | $7.96 billion | 2.44 | $1.07 billion | $4.27 | 17.33 |
Ameren has higher revenue and earnings than NorthWestern. NorthWestern is trading at a lower price-to-earnings ratio than Ameren, indicating that it is currently the more affordable of the two stocks.
Risk and Volatility
NorthWestern has a beta of 0.45, indicating that its stock price is 55% less volatile than the S&P 500. Comparatively, Ameren has a beta of 0.46, indicating that its stock price is 54% less volatile than the S&P 500.
Institutional and Insider Ownership
96.1% of NorthWestern shares are owned by institutional investors. Comparatively, 77.8% of Ameren shares are owned by institutional investors. 0.9% of NorthWestern shares are owned by insiders. Comparatively, 0.4% of Ameren shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.
Profitability
This table compares NorthWestern and Ameren’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| NorthWestern | 11.67% | 6.53% | 2.38% |
| Ameren | 13.65% | 10.50% | 2.93% |
Dividends
NorthWestern pays an annual dividend of $2.56 per share and has a dividend yield of 5.2%. Ameren pays an annual dividend of $2.52 per share and has a dividend yield of 3.4%. NorthWestern pays out 85.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Ameren pays out 59.0% of its earnings in the form of a dividend. NorthWestern has raised its dividend for 19 consecutive years and Ameren has raised its dividend for 10 consecutive years. NorthWestern is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Summary
Ameren beats NorthWestern on 13 of the 17 factors compared between the two stocks.
About NorthWestern
NorthWestern Corporation, doing business as NorthWestern Energy, provides electricity and natural gas to residential, commercial, and various industrial customers. The company operates through three segments: Electric Utility Operations; Natural Gas Utility Operations; and Other. It generates, purchases, transmits, and distributes electricity; and produces, purchases, stores, transmits, and distributes natural gas, as well as owns municipal franchises to provide natural gas service in the communities. The company operates 6,597 miles of electric transmission and 18,534 miles of electric distribution lines with approximately 121 transmission and distribution substations; and 2,235 miles of natural gas transmission and 5,099 miles of natural gas distribution lines with approximately 135 city gate stations in Montana. It also operates 1,308 miles of electric transmission and 2,342 miles of electric distribution lines in South Dakota with approximately 121 transmission and distribution substations; and 55 miles of natural gas transmission and 2,545 miles of natural gas distribution lines in South Dakota and Nebraska. The company serves approximately 764,200 customers in Montana, South Dakota, Nebraska, and Yellowstone National Park. NorthWestern Corporation was incorporated in 1923 and is based in Sioux Falls, South Dakota.
About Ameren
Ameren Corporation, together with its subsidiaries, operates as a public utility holding company in the United States. The company operates through four segments: Ameren Missouri, Ameren Illinois Electric Distribution, Ameren Illinois Natural Gas, and Ameren Transmission. It engages in the rate-regulated electric generation, transmission, and distribution activities; and rate-regulated natural gas distribution and transmission businesses. In addition, the company generates electricity through coal, nuclear, and natural gas, as well as renewable sources, such as hydroelectric, wind, methane gas, and solar. It serves residential, commercial, and industrial customers. The company was founded in 1881 and is headquartered in St. Louis, Missouri.
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