Home Energy services Head-to-head analysis: Algonquin Power & Utilities (NYSE: AQN) and NRG Energy (NYSE: NRG)

Head-to-head analysis: Algonquin Power & Utilities (NYSE: AQN) and NRG Energy (NYSE: NRG)

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Algonquin Power & Utilities (NYSE: AQNGet a rating) and NRG Energy (NYSE: NRGGet a rating) are both mid-cap utilities, but which is the better investment? We’ll compare the two companies based on their risk strength, valuation, profitability, analyst recommendations, dividends, earnings, and institutional ownership.

Analyst Recommendations

This is a summary of current ratings and price targets for Algonquin Power & Utilities and NRG Energy, as reported by MarketBeat.

Sales Ratings Hold odds Buy reviews Strong buy odds Rating
Algonquin Power & Utilities 0 6 3 0 2.33
NRG Energy 1 2 1 0 2.00

Algonquin Power & Utilities currently has a consensus price target of $16.31, indicating a potential upside of 17.10%. NRG Energy has a consensus price target of $43.50, indicating a potential upside of 12.67%. Given Algonquin Power & Utilities’ higher consensus rating and higher likely upside potential, research analysts clearly believe Algonquin Power & Utilities is more favorable than NRG Energy.

Dividends

Algonquin Power & Utilities pays an annual dividend of $0.68 per share and has a dividend yield of 4.9%. NRG Energy pays an annual dividend of $1.40 per share and has a dividend yield of 3.6%. Algonquin Power & Utilities pays 133.3% of its earnings as dividends, suggesting it may not have enough earnings to cover its dividend payment in the future. NRG Energy pays 8.5% of its profits as a dividend. Algonquin Power & Utilities has increased its dividend for 12 consecutive years and NRG Energy has increased its dividend for 3 consecutive years. Algonquin Power & Utilities is clearly the best dividend stock, given its higher yield and longer history of dividend growth.

Valuation and benefits

This chart compares revenue, earnings per share (EPS), and valuation of Algonquin Power & Utilities and NRG Energy.

Gross revenue Price/sales ratio Net revenue Earnings per share Price/earnings ratio
Algonquin Power & Utilities $2.29 billion 4.11 $264.86 million $0.51 27.31
NRG Energy $26.99 billion 0.34 $2.19 billion $16.43 2.35

NRG Energy has higher revenues and profits than Algonquin Power & Utilities. NRG Energy trades at a lower price-to-earnings ratio than Algonquin Power & Utilities, indicating that it is currently the more affordable of the two stocks.

Institutional and insider ownership

45.3% of Algonquin Power & Utilities shares are held by institutional investors. By comparison, 97.4% of NRG Energy’s shares are held by institutional investors. 0.8% of NRG Energy shares are held by insiders. Strong institutional ownership indicates that large fund managers, hedge funds, and endowments believe a stock is poised for long-term growth.

Profitability

This table compares the net margins, return on equity and return on assets of Algonquin Power & Utilities and NRG Energy.

Net margins Return on equity return on assets
Algonquin Power & Utilities 14.33% 6.88% 2.76%
NRG Energy 14.95% 45.51% 6.79%

Risk and Volatility

Algonquin Power & Utilities has a beta of 0.43, which means its stock price is 57% less volatile than the S&P 500. In comparison, NRG Energy has a beta of 0.89, which means its stock price is 11% less volatile than the S&P 500.

Summary

NRG Energy beats Algonquin Power & Utilities on 10 out of 17 factors compared between the two stocks.

Algonquin Power & Utilities Company Profile (Get a rating)

Algonquin Power & Utilities Corp., through its subsidiaries, owns and operates a portfolio of regulated and unregulated generation, distribution and transmission assets in Canada, the United States, Chile and Bermuda. It produces and sells electrical energy through renewable and clean energy generation facilities. The company also owns and operates hydroelectric, wind, solar and thermal facilities with a generating capacity of approximately 2.3 gigawatts; and regulated electricity, natural gas, water distribution and sewage collection systems. As of December 31, 2021, it serves approximately 307,000 electrical connections; 373,000 natural gas connections; and 413,000 regulated water supply and wastewater collection systems. The company was incorporated in 1988 and is headquartered in Oakville, Canada.

NRG Energy Company Profile (Get a rating)

NRG Energy, Inc., together with its subsidiaries, operates as an integrated electric utility in the United States. It operates across Texas, East and West. The company is involved in the generation, sale and delivery of electricity and related products and services to approximately 6 million residential, commercial, industrial and wholesale customers. It generates electricity using natural gas, coal, oil, solar, nuclear, and battery storage. The Company also provides system power, distributed generation, renewables, backup generation, storage and distributed solar, demand response, energy efficiency and consulting services, as well as specialized and carbon management; and on-site energy solutions. In addition, it trades in electricity, natural gas and related products; environmental products; meteorological products; and financial products, including futures, futures, options and swaps. In addition, the company purchases fuels; provides transportation services; and directly sells energy, services and products and services to retail customers under NRG, Reliant, Direct Energy, Green Mountain Energy, Stream and XOOM Energy. As of December 31, 2021, it owns and leases a power generation portfolio with a capacity of approximately 18,000 megawatts at 25 plants. NRG Energy, Inc. was founded in 1989 and is headquartered in Houston, Texas.



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