American Electric Power (NASDAQ:AEP – Get Free Report) and Hallador Energy (NASDAQ:HNRG – Get Free Report) are both utilities companies, but which is the superior investment? We will compare the two businesses based on the strength of their earnings, risk, institutional ownership, dividends, profitability, valuation and analyst recommendations.
Dividends
American Electric Power pays an annual dividend of $3.72 per share and has a dividend yield of 3.9%. Hallador Energy pays an annual dividend of $0.16 per share and has a dividend yield of 1.3%. American Electric Power pays out 74.5% of its earnings in the form of a dividend. Hallador Energy pays out -29.1% 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. American Electric Power has increased its dividend for 15 consecutive years. American Electric Power is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Profitability
This table compares American Electric Power and Hallador Energy’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| American Electric Power | 13.48% | 11.41% | 3.01% |
| Hallador Energy | -4.85% | -6.71% | -3.39% |
Volatility and Risk
Institutional and Insider Ownership
75.2% of American Electric Power shares are held by institutional investors. Comparatively, 61.4% of Hallador Energy shares are held by institutional investors. 0.1% of American Electric Power shares are held by insiders. Comparatively, 32.3% of Hallador Energy shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.
Valuation and Earnings
This table compares American Electric Power and Hallador Energy”s gross revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| American Electric Power | $19.60 billion | 2.57 | $2.21 billion | $4.99 | 18.94 |
| Hallador Energy | $429.36 million | 1.23 | $44.79 million | ($0.55) | -22.62 |
American Electric Power has higher revenue and earnings than Hallador Energy. Hallador Energy is trading at a lower price-to-earnings ratio than American Electric Power, indicating that it is currently the more affordable of the two stocks.
Analyst Ratings
This is a summary of recent recommendations for American Electric Power and Hallador Energy, as reported by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| American Electric Power | 1 | 8 | 5 | 0 | 2.29 |
| Hallador Energy | 0 | 0 | 2 | 0 | 3.00 |
American Electric Power presently has a consensus target price of $98.00, suggesting a potential upside of 3.70%. Hallador Energy has a consensus target price of $15.00, suggesting a potential upside of 20.58%. Given Hallador Energy’s stronger consensus rating and higher probable upside, analysts clearly believe Hallador Energy is more favorable than American Electric Power.
Summary
American Electric Power beats Hallador Energy on 12 of the 17 factors compared between the two stocks.
About American Electric Power
American Electric Power Company, Inc., an electric public utility holding company, engages in the generation, transmission, and distribution of electricity for sale to retail and wholesale customers in the United States. It operates through Vertically Integrated Utilities, Transmission and Distribution Utilities, AEP Transmission Holdco, and Generation & Marketing segments. The company generates electricity using coal and lignite, natural gas, renewable, nuclear, hydro, solar, wind, and other energy sources. It also supplies and markets electric power at wholesale to other electric utility companies, rural electric cooperatives, municipalities, and other market participants. American Electric Power Company, Inc. was incorporated in 1906 and is headquartered in Columbus, Ohio.
About Hallador Energy
Hallador Energy Company, through its subsidiaries, engages in the production of steam coal in the State of Indiana for the electric power generation industry. The company owns the Oaktown Mine 1 and Oaktown Mine 2 underground mines in Oaktown; Freelandville Center Pit surface mine in Freelandville; and Prosperity Surface mine in Petersburg, Indiana. It is also involved in gas exploration activities in Indiana; and operation of logistics transport facility. Hallador Energy Company was founded in 1949 and is headquartered in Terre Haute, Indiana.
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