Reviewing Vistra Energy (NYSE:VST) & Otter Tail (NYSE:OTTR)

Vistra Energy (NYSE:VST) and Otter Tail (NASDAQ:OTTR) are both utilities companies, but which is the better investment? We will compare the two companies based on the strength of their institutional ownership, earnings, valuation, dividends, profitability, risk and analyst recommendations.

Earnings and Valuation

This table compares Vistra Energy and Otter Tail’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Vistra Energy $11.81 billion 0.81 $928.00 million $2.07 9.47
Otter Tail $919.50 million 1.80 $86.85 million $2.17 18.85

Vistra Energy has higher revenue and earnings than Otter Tail. Vistra Energy is trading at a lower price-to-earnings ratio than Otter Tail, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Vistra Energy and Otter Tail’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Vistra Energy 6.45% 10.84% 3.22%
Otter Tail 9.34% 11.00% 3.82%

Institutional and Insider Ownership

93.2% of Vistra Energy shares are owned by institutional investors. Comparatively, 44.9% of Otter Tail shares are owned by institutional investors. 0.5% of Vistra Energy shares are owned by company insiders. Comparatively, 1.7% of Otter Tail shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Dividends

Vistra Energy pays an annual dividend of $0.54 per share and has a dividend yield of 2.8%. Otter Tail pays an annual dividend of $1.48 per share and has a dividend yield of 3.6%. Vistra Energy pays out 26.1% of its earnings in the form of a dividend. Otter Tail pays out 68.2% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Otter Tail has increased its dividend for 6 consecutive years. Otter Tail is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Recommendations

This is a summary of current recommendations for Vistra Energy and Otter Tail, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Vistra Energy 0 1 11 0 2.92
Otter Tail 0 3 2 0 2.40

Vistra Energy currently has a consensus price target of $32.18, suggesting a potential upside of 64.19%. Otter Tail has a consensus price target of $52.25, suggesting a potential upside of 27.75%. Given Vistra Energy’s stronger consensus rating and higher probable upside, analysts plainly believe Vistra Energy is more favorable than Otter Tail.

Volatility & Risk

Vistra Energy has a beta of 1.01, suggesting that its share price is 1% more volatile than the S&P 500. Comparatively, Otter Tail has a beta of 0.35, suggesting that its share price is 65% less volatile than the S&P 500.

Summary

Otter Tail beats Vistra Energy on 9 of the 17 factors compared between the two stocks.

About Vistra Energy

Vistra Energy Corp., through its subsidiaries, engages in the integrated power business in Texas. The company operates through Wholesale Generation and Retail Electricity segments. The Wholesale Generation segment engages in the electricity generation, wholesale energy sales and purchases, commodity risk management, fuel production, and fuel logistics management activities. As of February 26, 2018, this segment had a fleet of generation facilities totaling approximately 14,000 megawatts of generation in Texas, including 2,300 megawatts fueled by nuclear power, 4,000 megawatts fueled by coal, and 7,500 megawatts fueled by natural gas. The Retail Electricity segment is involved in the retail sale of electricity and related services to residential, commercial, and industrial customers under the TXU Energy brand. This segment served approximately 1.7 million residential and business customers. The company was formerly known as TCEH Corp. and changed its name to Vistra Energy Corp. in November 2016. The company is based in Irving, Texas.

About Otter Tail

Otter Tail Corporation, together with its subsidiaries, engages in electric, manufacturing, and plastics businesses in the United States. The company's Electric segment produces, transmits, distributes, and sells electric energy in Minnesota, North Dakota, and South Dakota; and operates as a participant in the Midcontinent Independent System Operator, Inc. markets. This segment generates electricity through coal, wind and hydro, and natural gas and oil sources. It serves approximately 130,000 residential, commercial, industrial, and other customers. Otter Tail Corporation's Manufacturing segment stamps, fabricates, welds, paints, and laser cuts metal components for use in the recreational vehicle, agricultural, oil and gas, lawn and garden, industrial equipment, health and fitness, and enclosure industries; manufactures and fabricates parts for off-road equipment, mining machinery, oil fields and offshore oil rigs, wind industry components, broadcast antennae, and farm equipment; and provides laser cutting services and stamping to weldments and assemblies for metal fabrication buyers and original equipment manufacturers. It also manufactures and sells thermoformed products for the horticulture industry; and clamshell packing, blister packs, returnable pallets, and handling trays for shipping and storing odd-shaped or difficult-to-handle parts for customers in the medical and life sciences, industrial, recreation, and electronics industries. The company's Plastics segment manufactures polyvinyl chloride pipes for municipal water, rural water, wastewater, storm drainage system, and other uses. This segment markets its products to wholesalers and distributors through independent sales representatives, company salespersons, and customer service representatives. The company was formerly known as Otter Tail Power Company and changed its name to Otter Tail Corporation in 2001. Otter Tail Corporation was founded in 1907 and is headquartered in Fergus Falls, Minnesota.

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