NRG Energy (NYSE: NRG) and American Electric Power (NYSE:AEP) are both utilities companies, but which is the superior business? We will compare the two companies based on the strength of their profitability, analyst recommendations, institutional ownership, risk, earnings, valuation and dividends.
Valuation and Earnings
This table compares NRG Energy and American Electric Power’s top-line revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|NRG Energy||$12.35 billion||0.62||-$774.00 million||($2.52)||-9.52|
|American Electric Power||$15.40 billion||2.02||$1.91 billion||$3.83||16.55|
This is a summary of current recommendations and price targets for NRG Energy and American Electric Power, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|American Electric Power||1||4||9||0||2.57|
NRG Energy presently has a consensus price target of $25.00, suggesting a potential upside of 4.17%. American Electric Power has a consensus price target of $75.38, suggesting a potential upside of 18.94%. Given American Electric Power’s higher probable upside, analysts clearly believe American Electric Power is more favorable than NRG Energy.
NRG Energy pays an annual dividend of $0.12 per share and has a dividend yield of 0.5%. American Electric Power pays an annual dividend of $2.48 per share and has a dividend yield of 3.9%. NRG Energy pays out -4.8% of its earnings in the form of a dividend. American Electric Power pays out 64.8% 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. NRG Energy has raised its dividend for 5 consecutive years.
Risk and Volatility
NRG Energy has a beta of 1.14, meaning that its stock price is 14% more volatile than the S&P 500. Comparatively, American Electric Power has a beta of 0.18, meaning that its stock price is 82% less volatile than the S&P 500.
Institutional & Insider Ownership
97.9% of NRG Energy shares are owned by institutional investors. Comparatively, 71.1% of American Electric Power shares are owned by institutional investors. 0.3% of NRG Energy shares are owned by insiders. Comparatively, 0.2% of American Electric Power shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.
This table compares NRG Energy and American Electric Power’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|American Electric Power||12.39%||10.05%||2.86%|
American Electric Power beats NRG Energy on 11 of the 17 factors compared between the two stocks.
NRG Energy Company Profile
NRG Energy, Inc. (NRG) is an integrated power company. The Company is engaged in producing, selling and delivering electricity and related products and services in various markets in the United States. The Company’s segments include Generation, Retail, Renewables, NRG Yield, Inc. (NRG Yield) and Corporate activities. The Generation segment includes generation, international and Boston Energy Trading and Marketing LLC (BETM). The Retail segment includes Mass customers and Business Solutions. Its Business Solutions include commercial, industrial and governmental/institutional (C&I) customers, and other distributed and reliability products. The Renewables segment includes solar and wind assets. The NRG Yield segment includes certain of the Company’s contracted generation assets. The corporate activities segment includes residential solar and electric vehicle services. The Company owned and operated approximately 47,000 megawatts (MW) of generation, as of December 31, 2016.
American Electric Power Company Profile
American Electric Power Company, Inc. (AEP) is a public utility holding company that owns, directly or indirectly, all of the outstanding common stock of its public utility subsidiaries and varying percentages of other subsidiaries. The service areas of the Company’s public utility subsidiaries cover the states of Arkansas, Indiana, Kentucky, Louisiana, Michigan, Ohio, Oklahoma, Tennessee, Texas, Virginia and West Virginia. The Company’s segments include Vertically Integrated Utilities, Transmission and Distribution Utilities, AEP Transmission Holdco, and Generation & Marketing. AEP’s vertically integrated utility operations are engaged in the generation, transmission and distribution of electricity for sale to retail and wholesale customers. Transmission and Distribution Utilities segment consists of the transmission and distribution of electricity for sale to retail and wholesale customers. AEP Transmission Holdco develops, constructs and operates transmission facilities.
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