DTE Energy vs. Brookfield Infrastructure: Which Utility’s Stock is a Better Buy?

NYSE: DTE | DTE Energy Co. News, Ratings, and Charts

DTE – Because market volatility is expected to continue for at least the near term, utility stocks should attract great investor attention due to their stable nature. In addition, President Biden’s Infrastructure bill should help drive the sector’s growth. Therefore, we think Brookfield Infrastructure (BIPC) and DTE Energy (DTE) should benefit. But which of these two stocks is a better buy now? Read more to find out.

Brookfield Infrastructure Corporation (BIPC) owns and operates regulated natural gas transmission systems in Brazil. The New York City-based company also engages in regulated gas and electricity distribution operations in the United Kingdom. In comparison, DTE Energy Company (DTE) in Detroit, Mich., participates in utility operations. The company operates in five segments: Electric; Gas; Gas Storage and Pipelines; Power and Industrial Projects; and Energy Trading.

The utility sector consists of companies that provide water, electricity, and natural gas services. While other industries were negatively affected by the COVID-19 pandemic last year, the utility sector was stable because the demand for these services was unchanged. 

Considering the current market volatility, which is in large measure due to the resurgence of COVID-19 cases and high inflation, investing in the utility sector could be beneficial now. Also, President Biden’s recently passed $1 trillion infrastructure bill is expected to boost the utility industry’s growth in the coming years. Therefore, we think both BIPC and DTE should benefit.

DTE has gained 0.8% in price over the past month, while BIPC has witnessed a loss.

Click here to check out our Infrastructure Sector Report for 2021

But which of these two stocks is a better buy now? Let’s find out.

Latest Developments

On October 19, 2021, Sam Pollock, Chief Executive Officer of Brookfield Infrastructure, said, “Looking ahead, we are confident in our ability to capitalize on new investment opportunities of scale across our target sectors and geographies.”

On October 18, 2021, DTE announced it would complete a 40% increase in its renewable energy capacity this year. The 535-megawatt expansion includes three wind parks that began operating in the spring and one solar park that will come online before the end of the year. Jerry Norcia, president and CEO of DTE, said, “As the state’s leading investor in and producer of renewable energy, DTE is committed to transitioning Michigan to a clean energy future while maintaining our focus on safety, reliability, and affordability.”

Recent Financial Results

BPIC’s revenues increased 33% year-over-year to $2.94 billion for its fiscal third quarter, ended September 30, 2021. The company’s adjusted EBITDA grew 22.9% year-over-year to $596 million, while its net income came in at $413 million, representing an 8,160% year-over-year increase. Also, its EPS was  $0.72 compared to a  $0.12 loss in the year-ago period.

DTE’s operating earnings decreased 19.5% year-over-year to $334 million for its fiscal third quarter, ended September 30, 2021. The company’s net income declined 94.7% year-over-year to $25 million. Also, its EPS came in at $0.13, down 94.7% year-over-year.

Profitability

DTE’s $14.15 billion trailing-12-month revenue is significantly higher than BIPC’s $1.60 billion. However, BIPC is more profitable, with gross profit  and EBITDA margins of 82.54% and 79.93%, respectively, compared to DTE’s 27.20% and 21.31%.

Furthermore, BIPC’s ROA and ROTC of 6.95% and 20.24%, respectively, are higher than DTE’s 2.80% and 4.02%

Valuation

In terms of forward P/CF, DTE is currently trading at 6.73x, which is 13.7% higher than BIPC’s 5.92x. And  DTE’s 13.04x forward EV/EBITDA ratio  is 93.2% higher than BIPC’s 6.75x.

So, BIPC is relatively affordable here.

POWR Ratings

BIPC has an overall B rating, which equates to a Buy in our proprietary POWR Ratings system. In comparison, DTE has an overall C rating, which translates to Neutral. The POWR Ratings are calculated considering 118 distinct factors, with each factor weighted to an optimal degree.

BIPC has a B grade for Quality. This is justified given BIPC’s 62.41% trailing-12-month EBIT margin, which is 198.5% higher than the 20.91% industry average. In contrast,  DTE has a Quality grade of D, which is in sync with its 13.30% trailing-12-month EBIT margin, which is 36.4% lower than the 20.91% industry average.

Of the 57 stocks in the Utilities – Domestic industry, BIPC is ranked first. In comparison, DTE is ranked #26.

Beyond what I have stated above, we have also rated the stocks for Growth, Value, Momentum, Stability, and Sentiment. Click here to view all the BIPC ratings. Also, get all the DTE ratings here.

The Winner

The utility industry is expected to grow steadily with increasing government investment worldwide. While both BIPC and DTE are expected to benefit, we think it is better to bet on BIPC now because of its lower valuation, higher profit margin, and robust financials.

Our research shows that odds of success increase when one invests in stocks with an Overall Rating of Strong Buy or Buy. View all the other top-rated stocks in the Utilities – Domestic industry here.

Click here to check out our Infrastructure Sector Report for 2021


DTE shares were trading at $114.84 per share on Wednesday afternoon, down $0.17 (-0.15%). Year-to-date, DTE has gained 16.27%, versus a 26.50% rise in the benchmark S&P 500 index during the same period.


About the Author: Nimesh Jaiswal


Nimesh Jaiswal's fervent interest in analyzing and interpreting financial data led him to a career as a financial analyst and journalist. The importance of financial statements in driving a stock’s price is the key approach that he follows while advising investors in his articles. More...


More Resources for the Stocks in this Article

TickerPOWR RatingIndustry RankRank in Industry
DTEGet RatingGet RatingGet Rating
BIPCGet RatingGet RatingGet Rating

Most Popular Stories on StockNews.com


:  |  News, Ratings, and Charts

Bulls in Charge…for Now at Least

Every since the S&P 500 (SPY) made new lows in mid June the bulls have been back in charge. At first it looked like your typical bear market rally. However, there are more and more signals going off that this may be the real deal. As in the new bull market may have arrived. That topic is a big deal as one's outlook, bullish or bearish, weighs heavily on how they construct their portfolio for the days and weeks ahead. That is why we will focus on that topic in today's commentary. Read on below for more…

:  |  News, Ratings, and Charts

The 3 Top Aerospace and Defense Stocks to Buy Now

The U.S. aerospace and defense industry is evolving, supported by lucrative fiscal investments and rapid defense technology advancement. Moreover, given the growing tension between China and Taiwan, it could be wise to add quality aerospace and defense stocks, Lockheed Martin (LMT), L3Harris Technologies (LHX), and Raytheon Technologies Corp. (RTX) to your portfolio now. Continue reading…

:  |  News, Ratings, and Charts

How to RIDE the Next Bull Market?

Growth stocks are back! And, they are leading the S&P 500 (SPY) higher after the brutal bear market investors experienced this year. Read on to find out the best strategy to profit from the next big bull market in growth stocks...

:  |  News, Ratings, and Charts

2 Momentum Stocks Crushing the Bear Market

Valero Energy (VLO) and Shell (SHEL) have maintained strong momentum amid the highly uncertain market conditions. With recession fears expected to keep the market under pressure in the near term, it could be wise to buy these stocks now to benefit from their momentum, which might continue for some time based on their fundamental strength irrespective of the market conditions. Read on…

:  |  News, Ratings, and Charts

How to RIDE the Next Bull Market?

Growth stocks are back! And, they are leading the S&P 500 (SPY) higher after the brutal bear market investors experienced this year. Read on to find out the best strategy to profit from the next big bull market in growth stocks...

Read More Stories

More DTE Energy Co. (DTE) News View All

Event/Date Symbol News Detail Start Price End Price Change POWR Rating
Loading, please wait...
View All DTE News