Xcel Energy (NASDAQ:XEL – Get Free Report) and NRG Energy (NYSE:NRG – Get Free Report) are both large-cap utilities companies, but which is the superior business? We will contrast the two companies based on the strength of their earnings, profitability, valuation, institutional ownership, analyst recommendations, risk and dividends.
Valuation and Earnings
This table compares Xcel Energy and NRG Energy”s revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Xcel Energy | $14.67 billion | 3.06 | $1.94 billion | $3.28 | 23.14 |
| NRG Energy | $28.13 billion | 1.17 | $1.13 billion | $6.69 | 22.91 |
Risk and Volatility
Xcel Energy has a beta of 0.46, indicating that its share price is 54% less volatile than the S&P 500. Comparatively, NRG Energy has a beta of 1.27, indicating that its share price is 27% more volatile than the S&P 500.
Analyst Recommendations
This is a summary of current recommendations and price targets for Xcel Energy and NRG Energy, as reported by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Xcel Energy | 1 | 1 | 12 | 3 | 3.00 |
| NRG Energy | 2 | 1 | 9 | 1 | 2.69 |
Xcel Energy currently has a consensus price target of $87.60, indicating a potential upside of 15.42%. NRG Energy has a consensus price target of $184.91, indicating a potential upside of 20.63%. Given NRG Energy’s higher probable upside, analysts clearly believe NRG Energy is more favorable than Xcel Energy.
Profitability
This table compares Xcel Energy and NRG Energy’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Xcel Energy | 13.76% | 10.83% | 2.95% |
| NRG Energy | 4.84% | 103.57% | 7.38% |
Dividends
Xcel Energy pays an annual dividend of $2.28 per share and has a dividend yield of 3.0%. NRG Energy pays an annual dividend of $1.90 per share and has a dividend yield of 1.2%. Xcel Energy pays out 69.5% of its earnings in the form of a dividend. NRG Energy pays out 28.4% 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. Xcel Energy has raised its dividend for 22 consecutive years and NRG Energy has raised its dividend for 1 consecutive years. Xcel Energy is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Insider and Institutional Ownership
78.4% of Xcel Energy shares are held by institutional investors. Comparatively, 97.7% of NRG Energy shares are held by institutional investors. 0.1% of Xcel Energy shares are held by company insiders. Comparatively, 0.9% of NRG Energy shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.
Summary
NRG Energy beats Xcel Energy on 10 of the 18 factors compared between the two stocks.
About Xcel Energy
Xcel Energy Inc., through its subsidiaries, engages in the generation, purchasing, transmission, distribution, and sale of electricity. It operates through Regulated Electric Utility, Regulated Natural Gas Utility, and All Other segments. The company generates electricity through wind, nuclear, hydroelectric, biomass, and solar energy sources, as well as coal, natural gas, oil, wood, and refuse-derived fuels. It also purchases, transports, distributes, and sells natural gas to retail customers, as well as transports customer-owned natural gas. In addition, the company develops and leases natural gas pipelines, and storage and compression facilities; and invests in rental housing projects and nonregulated assets, as well as procures equipment for the construction of renewable generation facilities. It serves residential, commercial, and industrial customers in the portions of Colorado, Michigan, Minnesota, New Mexico, North Dakota, South Dakota, Texas, and Wisconsin. The company was incorporated in 1909 and is headquartered in Minneapolis, Minnesota.
About NRG Energy
NRG Energy, Inc., together with its subsidiaries, operates as an energy and home services company in the United States and Canada. It operates through Texas; East; West/Services/Other; Vivint Smart Home; and Corporate Activities segments. The company produces and sells electricity generated using coal, oil, solar, and battery storage; natural gas; and a cloud-based home platform, including hardware, software, sales, installation, customer service, technical support, and professional monitoring solutions. It offers retail electricity and energy management, line and surge protection products, HVAC installation, repair and maintenance, home protection products, carbon offsets, back-up power stations, portable power, portable solar, and portable lighting; retail services comprising demand response, commodity sales, energy efficiency, and energy management solutions; and system power, distributed generation, renewable and low-carbon products, carbon management and specialty services, backup generation, storage and distributed solar, and energy advisory services. In addition, the company trades in power, natural gas, and related commodities; environmental products; weather products; and financial products, including forwards, futures, options, and swaps. It offers its products and services under the NRG, Reliant, Direct Energy, Green Mountain Energy, and Vivint. It serves residential, commercial, government, industrial, and wholesale customers. NRG Energy, Inc. was founded in 1989 and is headquartered in Houston, Texas.
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