Critical Analysis: Fortis (NYSE:FTS) and TXNM Energy (NYSE:TXNM)

Fortis (NYSE:FTS) and TXNM Energy (NYSE:TXNM) are both utilities companies, but which is the superior investment? We will contrast the two businesses based on the strength of their institutional ownership, analyst recommendations, earnings, valuation, risk, profitability and dividends.

Analyst Ratings

This is a breakdown of recent ratings and target prices for Fortis and TXNM Energy, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Fortis	2	1	0	0	1.33
TXNM Energy	0	2	3	0	2.60

TXNM Energy has a consensus price target of $52.00, indicating a potential upside of 10.29%. Given TXNM Energy’s stronger consensus rating and higher probable upside, analysts plainly believe TXNM Energy is more favorable than Fortis.

Insider and Institutional Ownership

57.8% of Fortis shares are held by institutional investors. Comparatively, 91.7% of TXNM Energy shares are held by institutional investors. 1.4% of TXNM Energy shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Volatility and Risk

Fortis has a beta of 0.5, meaning that its share price is 50% less volatile than the S&P 500. Comparatively, TXNM Energy has a beta of 0.4, meaning that its share price is 60% less volatile than the S&P 500.

Valuation & Earnings

This table compares Fortis and TXNM Energy”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Fortis	$8.53 billion	2.47	$1.17 billion	$2.38	17.70
TXNM Energy	$1.94 billion	2.19	$88.35 million	$1.92	24.56

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

Profitability

This table compares Fortis and TXNM Energy’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Fortis	14.06%	7.01%	2.32%
TXNM Energy	9.26%	9.69%	2.26%

Dividends

Fortis pays an annual dividend of $1.89 per share and has a dividend yield of 4.5%. TXNM Energy pays an annual dividend of $1.55 per share and has a dividend yield of 3.3%. Fortis pays out 79.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. TXNM Energy pays out 80.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Fortis is clearly the better dividend stock, given its higher yield and lower payout ratio.

Summary

Fortis beats TXNM Energy on 9 of the 16 factors compared between the two stocks.

About Fortis

Fortis Inc. operates as an electric and gas utility company in Canada, the United States, and the Caribbean countries. It generates, transmits, and distributes electricity to approximately 447,000 retail customers in southeastern Arizona; and 103,000 retail customers in Arizona's Mohave and Santa Cruz counties with an aggregate capacity of 3,408 megawatts (MW), including 68 MW of solar capacity and 250 MV of wind capacity. The company also sells wholesale electricity to other entities in the western United States; owns gas-fired and hydroelectric generating capacity totaling 65 MW; and distributes natural gas to approximately 1,087,000 residential, commercial, and industrial customers in British Columbia, Canada. In addition, it owns and operates the electricity distribution system that serves approximately 592,000 customers in southern and central Alberta; owns four hydroelectric generating facilities with a combined capacity of 225 MW; and provides operation, maintenance, and management services to five hydroelectric generating facilities. Further, the company distributes electricity in the island portion of Newfoundland and Labrador with an installed generating capacity of 145 MW; and on Prince Edward Island with a generating capacity of 90 MW. Additionally, it provides integrated electric utility service to approximately 69,000 customers in Ontario; approximately 275,000 customers in Newfoundland and Labrador; approximately 34,000 customers on Grand Cayman, Cayman Islands; and approximately 17,000 customers on certain islands in Turks and Caicos. It also holds long-term contracted generation assets in Belize consisting of 3 hydroelectric generating facilities with a combined capacity of 51 MW; and the Aitken Creek natural gas storage facility. It also owns and operates approximately 90,500 circuit Kilometers (km) of distribution lines; and approximately 51,600 km of natural gas pipelines. Fortis Inc. was founded in 1885 and is headquartered in St. John's, Canada.

About TXNM Energy

TXNM Energy, Inc., through its subsidiaries, provides electricity and electric services in the United States. It operates through Public Service Company of New Mexico (PNM) and Texas-New Mexico Power Company (TNMP) segments. The PNM segment engages in the generation, transmission, and distribution of electricity. The segment owns and leases communications, office and other equipment, office space, vehicles, and real estate. It generates electricity using coal, natural gas and oil, and nuclear fuel and waste, as well as solar, wind, geothermal, and battery storage energy sources. The TNMP segment provides regulated transmission and distribution services. The segment also owns and leases vehicles, service facilities, and office locations throughout its service territory. The company serves residential, commercial, and industrial customers and end-users of electricity in New Mexico and Texas. The company was formerly known as PNM Resources, Inc and changed its name to TXNM Energy, Inc. in August 2024. TXNM Energy, Inc. was founded in 1882 and is based in Albuquerque, New Mexico.