NRG Yield, Inc. Class C (NYLD) and Spark Energy (SPKE) Critical Contrast

NRG Yield, Inc. Class C (NYSE: NYLD) and Spark Energy (NASDAQ:SPKE) are both small-cap utilities companies, but which is the better stock? We will compare the two companies based on the strength of their dividends, institutional ownership, earnings, profitability, analyst recommendations, risk and valuation.

Dividends

NRG Yield, Inc. Class C pays an annual dividend of $1.15 per share and has a dividend yield of 6.8%. Spark Energy pays an annual dividend of $0.73 per share and has a dividend yield of 7.5%. NRG Yield, Inc. Class C pays out 230.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Spark Energy pays out 90.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Spark Energy is clearly the better dividend stock, given its higher yield and lower payout ratio.

Profitability

This table compares NRG Yield, Inc. Class C and Spark Energy’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
NRG Yield, Inc. Class C 4.10% 1.76% 0.48%
Spark Energy 1.84% 10.49% 3.38%

Insider & Institutional Ownership

29.5% of NRG Yield, Inc. Class C shares are held by institutional investors. Comparatively, 35.0% of Spark Energy shares are held by institutional investors. 0.2% of NRG Yield, Inc. Class C shares are held by company insiders. Comparatively, 66.9% of Spark Energy shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Earnings and Valuation

This table compares NRG Yield, Inc. Class C and Spark Energy’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
NRG Yield, Inc. Class C $1.02 billion 3.05 $67.00 million $0.50 33.70
Spark Energy $546.70 million 0.61 $14.44 million $0.81 11.98

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

Analyst Ratings

This is a breakdown of current ratings and recommmendations for NRG Yield, Inc. Class C and Spark Energy, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
NRG Yield, Inc. Class C 0 5 3 0 2.38
Spark Energy 0 2 4 0 2.67

NRG Yield, Inc. Class C presently has a consensus price target of $19.50, suggesting a potential upside of 15.73%. Spark Energy has a consensus price target of $22.08, suggesting a potential upside of 127.66%. Given Spark Energy’s stronger consensus rating and higher possible upside, analysts clearly believe Spark Energy is more favorable than NRG Yield, Inc. Class C.

Summary

Spark Energy beats NRG Yield, Inc. Class C on 10 of the 15 factors compared between the two stocks.

About NRG Yield, Inc. Class C

NRG Yield, Inc. serves as the primary vehicle, through which NRG Energy, Inc. owns, operates and acquires contracted renewable and conventional generation and thermal infrastructure assets. It owns a diversified portfolio of contracted renewable and conventional generation and thermal infrastructure assets in the United States. Its contracted generation portfolio includes three natural gas or dual-fired facilities, eight utility-scale solar and wind generation facilities and two portfolios of distributed solar facilities that collectively represent 1,324 net megawatt. The Company also own thermal infrastructure assets with an aggregate steam and chilled water capacity of 1,098 net megawatt and electric generation capacity of 123 net megawatt. In July 2014, NRG Yield Inc completed its acquisition of three Right of First Offer (ROFO) assets from NRG Energy, Inc. In August 2014, it acquired Alta Wind facility located in Tehachapi, California from Terra-Gen Power LLC.

About Spark Energy

Spark Energy, Inc. is an independent retail energy services company. The Company provides residential and commercial customers across the United States with an alternative choice for their natural gas and electricity. The Company operates through two segments: Retail Natural Gas Segment and Retail Electricity Segment. The Retail Natural Gas segment consists of natural gas sales to, and natural gas transportation and distribution for, residential and commercial customers. It purchases natural gas supply through physical and financial transactions with market counterparts and supplies natural gas to residential and commercial consumers pursuant to fixed-price and variable-price. The Retail Electricity segment consists of electricity sales and transmission to residential and commercial customers. The Company has approximately 774,000 renewable energy credits (RCEs). As of July 5, 2017, the Company operates in 94 utility service territories across 19 states and the District of Columbia.

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