Head-To-Head Analysis: Ameren (NYSE:AEE) and NRG Energy (NYSE:NRG)

NRG Energy (NYSE:NRG) and Ameren (NYSE:AEE) 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, dividends, earnings, risk, analyst recommendations, profitability and valuation.

Earnings & Valuation

This table compares NRG Energy and Ameren”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
NRG Energy	$30.71 billion	0.86	$864.00 million	$0.85	147.49
Ameren	$8.80 billion	3.48	$1.46 billion	$5.56	19.88

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

Risk and Volatility

NRG Energy has a beta of 1.21, indicating that its share price is 21% more volatile than the S&P 500. Comparatively, Ameren has a beta of 0.47, indicating that its share price is 53% less volatile than the S&P 500.

Dividends

NRG Energy pays an annual dividend of $1.90 per share and has a dividend yield of 1.5%. Ameren pays an annual dividend of $3.00 per share and has a dividend yield of 2.7%. NRG Energy pays out 223.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Ameren pays out 54.0% of its earnings in the form of a dividend. NRG Energy has raised its dividend for 1 consecutive years and Ameren has raised its dividend for 12 consecutive years. Ameren is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Ratings

This is a breakdown of current ratings and price targets for NRG Energy and Ameren, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
NRG Energy	0	4	10	1	2.80
Ameren	0	3	10	0	2.77

NRG Energy presently has a consensus target price of $201.79, suggesting a potential upside of 60.96%. Ameren has a consensus target price of $121.50, suggesting a potential upside of 9.93%. Given NRG Energy’s stronger consensus rating and higher possible upside, analysts plainly believe NRG Energy is more favorable than Ameren.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
NRG Energy	0.74%	70.67%	4.95%
Ameren	17.17%	10.94%	2.99%

Insider and Institutional Ownership

97.7% of NRG Energy shares are held by institutional investors. Comparatively, 79.1% of Ameren shares are held by institutional investors. 0.4% of NRG Energy shares are held by company insiders. Comparatively, 0.3% of Ameren shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Summary

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

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.

About Ameren

Ameren Corporation, together with its subsidiaries, operates as a public utility holding company in the United States. The company operates through four segments: Ameren Missouri, Ameren Illinois Electric Distribution, Ameren Illinois Natural Gas, and Ameren Transmission. It engages in the rate-regulated electric generation, transmission, and distribution activities; and rate-regulated natural gas distribution business. In addition, the company generates electricity through coal, nuclear, and natural gas, as well as renewable sources, such as hydroelectric, wind, methane gas, and solar. It serves residential, commercial, and industrial customers. The company was founded in 1881 and is headquartered in Saint Louis, Missouri.