NRG Energy (NYSE: NRG) and Atlantica Yield PLC (NASDAQ:ABY) are both mid-cap utilities companies, but which is the superior investment? We will compare the two businesses based on the strength of their earnings, risk, dividends, analyst recommendations, profitability, institutional ownership and valuation.

Earnings and Valuation

This table compares NRG Energy and Atlantica Yield PLC’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
NRG Energy $12.53 billion 0.60 $2.50 billion ($4.36) -5.49
Atlantica Yield PLC $1.00 billion 2.08 $697.25 million $0.30 69.30

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

Analyst Recommendations

This is a breakdown of current ratings and target prices for NRG Energy and Atlantica Yield PLC, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
NRG Energy 0 1 6 0 2.86
Atlantica Yield PLC 0 1 2 0 2.67

NRG Energy presently has a consensus target price of $21.83, indicating a potential downside of 8.72%. Atlantica Yield PLC has a consensus target price of $22.33, indicating a potential upside of 7.42%. Given Atlantica Yield PLC’s higher possible upside, analysts clearly believe Atlantica Yield PLC is more favorable than NRG Energy.

Dividends

NRG Energy pays an annual dividend of $0.12 per share and has a dividend yield of 0.5%. Atlantica Yield PLC pays an annual dividend of $1.04 per share and has a dividend yield of 5.0%. NRG Energy pays out -2.8% of its earnings in the form of a dividend. Atlantica Yield PLC pays out 346.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Volatility & Risk

NRG Energy has a beta of 1.23, indicating that its share price is 23% more volatile than the S&P 500. Comparatively, Atlantica Yield PLC has a beta of 1.12, indicating that its share price is 12% more volatile than the S&P 500.

Profitability

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

Net Margins Return on Equity Return on Assets
NRG Energy -10.67% 12.38% 1.85%
Atlantica Yield PLC 3.15% 1.58% 0.30%

Insider & Institutional Ownership

91.7% of NRG Energy shares are held by institutional investors. Comparatively, 47.8% of Atlantica Yield PLC shares are held by institutional investors. 0.3% of NRG Energy shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Summary

NRG Energy beats Atlantica Yield PLC on 10 of the 15 factors compared between the two stocks.

About NRG Energy

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.

About Atlantica Yield PLC

Atlantica Yield plc, formerly Abengoa Yield plc, is a total return company. The Company owns, manages, and acquires renewable energy, conventional power, electric transmission lines and water assets, focused on North America (the United States and Mexico), South America (Peru, Chile, Brazil and Uruguay) and Europe, Middle East and Africa (Spain, Algeria and South Africa). Its segments include North America, South America and EMEA. It operates in business sectors, including renewable energy, conventional power, electric transmission lines and water. As of December 31, 2016, it owned or had interests in 21 assets, comprising 1,442 megawatt (MW) of renewable energy generation, 300 MW of conventional power generation, 1,099 miles of electric transmission lines, as well as an exchangeable preferred equity investment in Abengoa Concessoes Brasil Holding S.A., (ACBH). The renewable energy sector includes its activities related to the production electricity from solar power and wind plants.

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