Critical Analysis: Avista (AVA) versus United Utilities Group (UUGRY)

Avista (NYSE: AVA) and United Utilities Group (OTCMKTS:UUGRY) are both mid-cap utilities companies, but which is the superior business? We will contrast the two companies based on the strength of their dividends, valuation, earnings, profitability, analyst recommendations, risk and institutional ownership.

Profitability

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This table compares Avista and United Utilities Group’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Avista	7.66%	7.25%	2.27%
United Utilities Group	N/A	N/A	N/A

Analyst Recommendations

This is a summary of recent ratings and price targets for Avista and United Utilities Group, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Avista	1	2	0	0	1.67
United Utilities Group	0	5	2	0	2.29

Avista currently has a consensus price target of $46.50, indicating a potential downside of 11.95%. Given Avista’s higher possible upside, equities research analysts clearly believe Avista is more favorable than United Utilities Group.

Insider & Institutional Ownership

77.7% of Avista shares are owned by institutional investors. Comparatively, 0.2% of United Utilities Group shares are owned by institutional investors. 1.1% of Avista shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Earnings & Valuation

This table compares Avista and United Utilities Group’s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Avista	$1.45 billion	2.40	$115.91 million	$1.95	27.08
United Utilities Group	$2.30 billion	3.06	$470.21 million	N/A	N/A

United Utilities Group has higher revenue and earnings than Avista.

Dividends

Avista pays an annual dividend of $1.49 per share and has a dividend yield of 2.8%. United Utilities Group pays an annual dividend of $1.01 per share and has a dividend yield of 4.9%. Avista pays out 76.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Avista has raised its dividend for 15 consecutive years.

Volatility and Risk

Avista has a beta of 0.32, indicating that its share price is 68% less volatile than the S&P 500. Comparatively, United Utilities Group has a beta of 0.57, indicating that its share price is 43% less volatile than the S&P 500.

Summary

United Utilities Group beats Avista on 8 of the 15 factors compared between the two stocks.

About Avista

Avista Corporation operates as an electric and natural gas utility company. It operates through two segments, Avista Utilities and AEL&P. The Avista Utilities segment provides electric distribution and transmission, and natural gas distribution services in parts of eastern Washington and northern Idaho; and natural gas distribution services in parts of northeastern and southwestern Oregon, as well as generates electricity in Washington, Idaho, Oregon, and Montana. This segment also engages in the wholesale purchase and sale of electricity and natural gas. The AEL&P segment offers electric services to approximately 17,000 customers in the city and borough of Juneau, Alaska. The company generates electricity through hydro, thermal, and wind facilities. As of February 21, 2018, it supplied retail electric services to approximately 382,000 customers and retail natural gas service to approximately 347,000 customers. In addition, the company engages in sheet metal fabrication, venture fund investments, real estate investments, and other investments. Avista Corporation was founded in 1889 and is headquartered in Spokane, Washington.

About United Utilities Group

United Utilities Group PLC provides water and wastewater services in the United Kingdom. It is also involved in renewable energy generation, corporate trustee, and property management activities; and the provision of consulting and project management services. The company operates 43,000 kilometers (km) of pipes; 77,000 km of sewerage pipes; 567 wastewater treatment works; and 91 water treatment works. It serves 3 million households and 200,000 business customers. United Utilities Group PLC was incorporated in 2008 and is based in Warrington, the United Kingdom.