Contrasting FirstEnergy (FE) & NRG Energy (NRG)

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

Profitability

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

Net Margins Return on Equity Return on Assets
FirstEnergy -11.86% 24.42% 3.90%
NRG Energy -11.52% 61.11% 4.02%

Valuation and Earnings

This table compares FirstEnergy and NRG Energy’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
FirstEnergy $14.02 billion 1.43 -$1.72 billion $3.07 12.73
NRG Energy $10.63 billion 1.11 -$2.15 billion $1.09 37.21

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

Dividends

FirstEnergy pays an annual dividend of $1.44 per share and has a dividend yield of 3.7%. NRG Energy pays an annual dividend of $0.12 per share and has a dividend yield of 0.3%. FirstEnergy pays out 46.9% of its earnings in the form of a dividend. NRG Energy pays out 11.0% 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.

Insider and Institutional Ownership

94.8% of FirstEnergy shares are held by institutional investors. Comparatively, 97.5% of NRG Energy shares are held by institutional investors. 0.3% of FirstEnergy shares are held by company insiders. Comparatively, 0.4% of NRG Energy shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Analyst Ratings

This is a breakdown of recent ratings and recommmendations for FirstEnergy and NRG Energy, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
FirstEnergy 0 2 8 0 2.80
NRG Energy 0 1 4 0 2.80

FirstEnergy currently has a consensus target price of $39.67, indicating a potential upside of 1.50%. NRG Energy has a consensus target price of $38.80, indicating a potential downside of 4.34%. Given FirstEnergy’s higher possible upside, research analysts plainly believe FirstEnergy is more favorable than NRG Energy.

Risk and Volatility

FirstEnergy has a beta of 0.3, indicating that its share price is 70% less volatile than the S&P 500. Comparatively, NRG Energy has a beta of 1.05, indicating that its share price is 5% more volatile than the S&P 500.

Summary

NRG Energy beats FirstEnergy on 8 of the 15 factors compared between the two stocks.

FirstEnergy Company Profile

FirstEnergy Corp., through its subsidiaries, generates, transmits, and distributes electricity in the United States. The company operates through Regulated Distribution, Regulated Transmission, and Competitive Energy Services segments. It owns and operates coal-fired, nuclear, hydroelectric, oil and natural gas, wind, and solar power generating facilities. The company also provides energy-related products and services to retail and wholesale customers. It operates 24,493 circuit miles of overhead and underground transmission lines; and electric distribution systems, including 276,555 miles of overhead pole line and underground conduit carrying primary, secondary, and street lighting circuits, as well as owns substations with a total installed transformer capacity of approximately 164,470,215 kilovolt-amperes. The company serves approximately six million customers in Ohio, Pennsylvania, West Virginia, Maryland, New Jersey, and New York. FirstEnergy Corp. was founded in 1996 and is headquartered in Akron, Ohio.

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.

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