Contrasting NRG Energy (NYSE:NRG) and Clearway Energy (NYSE:CWEN)

NRG Energy (NYSE:NRG) and Clearway Energy (NYSE:CWEN) are both utilities companies, but which is the superior business? We will contrast the two companies based on the strength of their profitability, valuation, earnings, analyst recommendations, risk, institutional ownership and dividends.

Institutional and Insider Ownership

96.2% of NRG Energy shares are owned by institutional investors. Comparatively, 32.6% of Clearway Energy shares are owned by institutional investors. 0.6% of NRG Energy shares are owned by company insiders. Comparatively, 0.2% of Clearway Energy shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Analyst Ratings

This is a breakdown of recent recommendations and price targets for NRG Energy and Clearway Energy, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
NRG Energy 0 2 3 1 2.83
Clearway Energy 1 3 1 0 2.00

NRG Energy currently has a consensus target price of $46.83, indicating a potential upside of 14.93%. Clearway Energy has a consensus target price of $14.67, indicating a potential downside of 27.00%. Given NRG Energy’s stronger consensus rating and higher probable upside, research analysts clearly believe NRG Energy is more favorable than Clearway Energy.

Risk & Volatility

NRG Energy has a beta of 0.79, indicating that its share price is 21% less volatile than the S&P 500. Comparatively, Clearway Energy has a beta of 1.22, indicating that its share price is 22% more volatile than the S&P 500.

Valuation and Earnings

This table compares NRG Energy and Clearway Energy’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
NRG Energy $9.48 billion 1.09 $268.00 million $2.41 16.91
Clearway Energy $1.05 billion 3.69 $52.00 million $0.46 43.67

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

Profitability

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

Net Margins Return on Equity Return on Assets
NRG Energy 6.20% -45.11% 5.92%
Clearway Energy -8.90% -4.14% -1.06%

Dividends

NRG Energy pays an annual dividend of $0.12 per share and has a dividend yield of 0.3%. Clearway Energy pays an annual dividend of $0.80 per share and has a dividend yield of 4.0%. NRG Energy pays out 5.0% of its earnings in the form of a dividend. Clearway Energy pays out 173.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Summary

NRG Energy beats Clearway Energy on 12 of the 17 factors compared between the two stocks.

NRG Energy Company Profile

NRG Energy, Inc., together with its subsidiaries, operates as an energy company in the United States. The company is involved in the producing, selling, and delivering electricity and related products and services to 3.1 million residential, industrial, and commercial consumers. It generates electricity using natural gas, coal, oil, solar, nuclear, wind, fossil fuel, and nuclear sources. The company also provides system power, distributed generation, solar and wind products, backup generation, storage and distributed solar, demand response, energy efficiency, advisory, and on-site energy solutions; and carbon management and specialty services. In addition, it trades in electric power, natural gas, and related commodity and financial products, including forwards, futures, options, and swaps. Further, the company supplies fuels; provides transportation services; and directly sells energy, services, and products and services to retail customers under the NRG, Reliant, and other names. It develops, constructs, owns, and operates natural gas, coal, oil, solar, nuclear, wind, fossil fuel, and nuclear plants with generation capacity of 23,000 megawatts. The company was founded in 1989 and is headquartered in Princeton, New Jersey.

Clearway Energy Company Profile

Clearway Energy, Inc., through its subsidiaries, acquires, owns, and operates contracted renewable energy and conventional generation, and thermal infrastructure assets in the United States. As of December 31, 2018, it had contracted generation portfolio of 5,272 net megawatts (MWs) of wind, solar, and natural gas-fired power generation facilities, as well as district energy systems. The company also owns thermal infrastructure assets with an aggregate steam and chilled water capacity of 1,385 net MW thermal equivalents; and electric generation capacity of 133 net MWs. Its thermal infrastructure assets provide steam, hot water and/or chilled water, and electricity to commercial businesses, universities, hospitals, and governmental units. The company was founded in 2012 and is based in Princeton, New Jersey. Clearway Energy, Inc. is a subsidiary of Clearway Energy Group LLC.

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