Critical Comparison: NRG Energy (NRG) and Portland General Electric (POR)

Portland General Electric (NYSE: POR) and NRG Energy (NYSE:NRG) are both mid-cap utilities companies, but which is the better stock? We will contrast the two businesses based on the strength of their earnings, valuation, dividends, risk, profitability, analyst recommendations and institutional ownership.

Profitability

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

Net Margins Return on Equity Return on Assets
Portland General Electric 10.21% 8.65% 2.70%
NRG Energy -13.48% 8.82% 1.25%

Analyst Recommendations

This is a summary of recent ratings and recommmendations for Portland General Electric and NRG Energy, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Portland General Electric 3 4 0 0 1.57
NRG Energy 0 1 6 0 2.86

Portland General Electric currently has a consensus price target of $44.00, indicating a potential upside of 9.75%. NRG Energy has a consensus price target of $25.00, indicating a potential downside of 2.00%. Given Portland General Electric’s higher probable upside, analysts plainly believe Portland General Electric is more favorable than NRG Energy.

Dividends

Portland General Electric pays an annual dividend of $1.36 per share and has a dividend yield of 3.4%. NRG Energy pays an annual dividend of $0.12 per share and has a dividend yield of 0.5%. Portland General Electric pays out 59.1% of its earnings in the form of a dividend. NRG Energy pays out -2.4% 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. NRG Energy has increased its dividend for 12 consecutive years.

Institutional and Insider Ownership

92.5% of Portland General Electric shares are owned by institutional investors. Comparatively, 97.9% of NRG Energy shares are owned by institutional investors. 0.6% of Portland General Electric shares are owned by insiders. Comparatively, 0.3% of NRG Energy shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Earnings and Valuation

This table compares Portland General Electric and NRG Energy’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Portland General Electric $1.92 billion 1.86 $193.00 million $2.30 17.43
NRG Energy $12.35 billion 0.65 -$774.00 million ($5.10) -5.00

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

Volatility & Risk

Portland General Electric has a beta of 0.18, meaning that its share price is 82% less volatile than the S&P 500. Comparatively, NRG Energy has a beta of 1.15, meaning that its share price is 15% more volatile than the S&P 500.

Summary

Portland General Electric beats NRG Energy on 9 of the 17 factors compared between the two stocks.

About Portland General Electric

Portland General Electric Company is an electric utility that is engaged in the wholesale purchase, transmission, distribution and retail sale of electricity in the State of Oregon. Its service area allocation of approximately 4,000 square miles is located entirely within Oregon and includes approximately 51 incorporated cities, of which Portland and Salem. It has five natural gas-fired generating facilities, which include Port Westward Unit 1 (PW1), Port Westward Unit 2 (PW2), Beaver natural gas-fired generating plant (Beaver), Coyote Springs Unit 1 (Coyote Springs) and Carty natural gas-fired generating plant (Carty). As of December 31, 2016, the Company owned and operated two wind farms, Biglow Canyon Wind Farm (Biglow Canyon) and Tucannon River Wind Farm (Tucannon River). The Company’s hydroelectric projects consist of Pelton/Round Butte on the Deschutes River near Madras, Oregon, four plants on the Clackamas River, and one on the Willamette River.

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.

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