NRG Energy (NRG) vs. NextEra Energy (NEE) Financial Analysis

NRG Energy (NYSE:NRG) and NextEra Energy (NYSE:NEE) are both large-cap utilities companies, but which is the better stock? We will compare the two companies based on the strength of their institutional ownership, profitability, earnings, dividends, valuation, risk and analyst recommendations.

Dividends

NRG Energy pays an annual dividend of $0.12 per share and has a dividend yield of 0.3%. NextEra Energy pays an annual dividend of $4.44 per share and has a dividend yield of 2.6%. NRG Energy pays out 11.0% of its earnings in the form of a dividend. NextEra Energy pays out 66.3% 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. NextEra Energy has raised its dividend for 8 consecutive years. NextEra Energy is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Valuation and Earnings

This table compares NRG Energy and NextEra Energy’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
NRG Energy $10.63 billion 1.04 -$2.15 billion $1.09 33.37
NextEra Energy $17.20 billion 4.65 $5.38 billion $6.70 25.28

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

Insider & Institutional Ownership

98.9% of NRG Energy shares are held by institutional investors. Comparatively, 76.3% of NextEra Energy shares are held by institutional investors. 0.4% of NRG Energy shares are held by company insiders. Comparatively, 0.6% of NextEra Energy shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Profitability

This table compares NRG Energy and NextEra Energy’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
NRG Energy -9.30% 29.44% 3.08%
NextEra Energy 49.10% 10.49% 3.52%

Analyst Ratings

This is a summary of recent ratings and price targets for NRG Energy and NextEra Energy, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
NRG Energy 0 1 4 0 2.80
NextEra Energy 0 3 11 0 2.79

NRG Energy presently has a consensus target price of $37.40, suggesting a potential upside of 2.83%. NextEra Energy has a consensus target price of $168.92, suggesting a potential downside of 0.26%. Given NRG Energy’s stronger consensus rating and higher possible upside, equities research analysts clearly believe NRG Energy is more favorable than NextEra Energy.

Volatility & Risk

NRG Energy has a beta of 1.05, suggesting that its share price is 5% more volatile than the S&P 500. Comparatively, NextEra Energy has a beta of 0.2, suggesting that its share price is 80% less volatile than the S&P 500.

Summary

NextEra Energy beats NRG Energy on 10 of the 17 factors compared between the two stocks.

NRG Energy Company Profile

NRG Energy, Inc., together with its subsidiaries, operates as an integrated power company in the United States. The company is involved in the generation of electricity using fossil fuel and nuclear sources. The company provides electricity to 2.9 million residential, commercial, and industrial consumers; system power, distributed generation, solar and wind products, backup generation, storage and distributed solar, demand response, energy efficiency, and on-site energy solutions; and carbon management and specialty services. In addition, it owns, operates, and develops solar and wind power projects; develops, constructs, and finances a range of solutions for utilities, schools, municipalities, and commercial markets; and trades in electric power, natural gas, and related commodity and financial products, including forwards, futures, options, and swaps. Further, the company transacts and trades in fuel and transportation services; directly sells energy, services, and products and services to retail customers under the NRG, Reliant, and other names; and provides steam, hot water, and chilled water, as well as electricity to commercial businesses, universities, hospitals, and governmental units. It operates natural gas, coal, Uranium, oil, solar, wind, fossil fuel, and nuclear plants with generation capacity of 30,000 megawatts. The company was founded in 1989 and is headquartered in Princeton, New Jersey.

NextEra Energy Company Profile

NextEra Energy, Inc., through its subsidiaries, generates, transmits, distributes, and sells electric power to retail and wholesale customers in North America. The company generates electricity through wind, solar, nuclear, and natural gas-fired facilities. It also provides risk management services related to power and gas consumption. As of February 16, 2018, the company operated approximately 46,790 megawatts of net generating capacity. As of December 31, 2017, it served approximately 10 million people through approximately 5 million customer accounts in the east and lower west coasts of Florida with approximately 75,000 circuit miles of transmission and distribution lines and approximately 620 substations. The company was formerly known as FPL Group, Inc. and changed its name to NextEra Energy, Inc. in 2010. NextEra Energy, Inc. was founded in 1925 and is headquartered in Juno Beach, Florida.

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