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DTE or XEL: Which Electric Utility Stock Should You Add?

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Utility electric power companies are generally focused on the domestic front. Demand for utilities is independent of market volatility, which makes them appropriate picks for investors.  

These stocks are highly regulated as well as capital intensive at the federal and state levels. Stable earnings and performance along with consistent cash rewards to shareholders make these stocks attractive.

In this article, we run a comparative analysis of two electric power utilities — Xcel Energy Inc. (XEL - Free Report) and DTE Energy Company (DTE - Free Report) — to ascertain the better option for investment.

Xcel Energy, carrying a Zacks Rank #2 (Buy), has a market capitalization of around $26.50 billion. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

DTE Energy, carrying a Zacks Rank #3 (Hold), has a market capitalization of $21.36 billion.

Current Ratio

This metric measures the ability of a company to meet short-term debt obligations, efficiently. This ratio reflects the current level of total assets compared with the current level of liabilities. Here, DTE Energy is a winner with a current ratio of 1.47, better than Xcel Energy’s reading of 0.78.

Return on Equity (ROE)

ROE is a measure of a company’s efficiency in utilizing shareholders’ funds. ROE for the trailing 12-months for DTE Energy and Xcel Energy is 11.62% and 10.75%, respectively. DTE Energy has an edge over Xcel Energy.


Dividend Yield

Currently, dividend yield for Xcel Energy is at 2.95%, lower than 3.01% of DTE Energy. DTE Energy wins this round.

Earnings Surprise

DTE Energy posted third-quarter 2018 operating earnings per share of $2.13, which outpaced the Zacks Consensus Estimate of $1.74 by 22.4%. Xcel Energy delivered third-quarter 2018 operating earnings of 96 cents per share, missing the Zacks Consensus Estimate of 98 cents by 2.0%.

Price Movement

In the past six months, shares of DTE Energy Xcel Energy have gained 14.9% compared with the industry’s 5.3% and Xcel Energy’s 13.2%.


Estimate Revision

In the past 60 days, the Zacks Consensus Estimate for Xcel Energy’s 2018 earnings remained unchanged at $2.47 per share, while the same for DTE Energy’s 2018 earnings moved up 2.3% to $6.30.

VGM Score

Here V stands for Value, G for Growth and M for Momentum with the score being a weighted combination of all three factors. Back tested results show that stocks with a favorable VGM Score of A or B coupled with a top Zacks Rank offer the best investment bets. Xcel Energy holds a VGM Score of D, while DTE Energy holds a B.

 The Verdict

Our comparative analysis shows that Xcel Energy holds an edge over DTE Energy in terms of rank. Nevertheless, DTE Energy takes the cake in terms of current ratio, ROE measure, price performance, dividend yield, VGM Score, earnings surprise and estimate revisions. It is clear that DTE Energy is a better investment option than Xcel Energy.

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