Reviewing NRG Energy (NYSE:NRG) and Atlantica Sustainable Infrastructure (NASDAQ:AY)

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

Analyst Ratings

This is a summary of current ratings and target prices for Atlantica Sustainable Infrastructure and NRG Energy, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Atlantica Sustainable Infrastructure 0 1 3 0 2.75
NRG Energy 1 1 6 0 2.63

Atlantica Sustainable Infrastructure presently has a consensus target price of $43.67, suggesting a potential upside of 14.97%. NRG Energy has a consensus target price of $44.31, suggesting a potential upside of 17.29%. Given NRG Energy’s higher probable upside, analysts plainly believe NRG Energy is more favorable than Atlantica Sustainable Infrastructure.

Dividends

Atlantica Sustainable Infrastructure pays an annual dividend of $1.68 per share and has a dividend yield of 4.4%. NRG Energy pays an annual dividend of $1.30 per share and has a dividend yield of 3.4%. Atlantica Sustainable Infrastructure pays out 275.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. NRG Energy pays out 32.8% of its earnings in the form of a dividend. Atlantica Sustainable Infrastructure has raised its dividend for 4 consecutive years and NRG Energy has raised its dividend for 1 consecutive years. Atlantica Sustainable Infrastructure is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

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

Net Margins Return on Equity Return on Assets
Atlantica Sustainable Infrastructure 6.37% 3.86% 0.64%
NRG Energy 43.90% 50.32% 6.93%

Insider & Institutional Ownership

37.8% of Atlantica Sustainable Infrastructure shares are held by institutional investors. Comparatively, 95.7% of NRG Energy shares are held by institutional investors. 0.7% of NRG Energy shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Risk & Volatility

Atlantica Sustainable Infrastructure has a beta of 0.76, suggesting that its share price is 24% less volatile than the S&P 500. Comparatively, NRG Energy has a beta of 1, suggesting that its share price has a similar volatility profile to the S&P 500.

Valuation and Earnings

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

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Atlantica Sustainable Infrastructure $1.01 billion 4.01 $62.13 million $0.61 62.31
NRG Energy $9.82 billion 0.94 $4.44 billion $3.96 9.54

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

Summary

NRG Energy beats Atlantica Sustainable Infrastructure on 12 of the 17 factors compared between the two stocks.

About Atlantica Sustainable Infrastructure

Atlantica Sustainable Infrastructure plc owns and manages renewable energy, natural gas, transmission and transportation infrastructures, and water assets in the United States, Canada, Mexico, Peru, Chile, Uruguay, Spain, Algeria, and South Africa. It owns 28 assets comprising 1,591 MW of aggregate renewable energy installed generation capacity; 343 MW of natural gas-fired power generation capacity; 1,166 miles of electric transmission lines; and 17.5 million cubic feet per day of water desalination assets. The company was formerly known as Atlantica Yield plc and changed its name to Atlantica Sustainable Infrastructure plc in May 2020. Atlantica Sustainable Infrastructure plc was incorporated in 2013 and is based in Brentford, the United Kingdom.

About NRG Energy

NRG Energy, Inc., together with its subsidiaries, operates as an integrated power company in the United States. It operates through Texas, East, and West. The company is involved in the producing, selling, and delivering electricity and related products and services to 3.6 million residential, industrial, and commercial consumers. It generates electricity using natural gas, coal, oil, solar, nuclear, and battery storage. The company also provides system power, distributed generation, renewable 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 commodities; environmental products; weather products; and financial products, including forwards, futures, options, and swaps. Further, the company procures fuels; provides transportation services; and directly sells energy, services, and products and services to retail customers under the NRG, Reliant, Green Mountain Energy, Stream, XOOM Energy, and other brand names. As of December 31, 2020, it owns power generation portfolio with approximately 23,000 megawatts of capacity at 33 plants. NRG Energy, Inc. was founded in 1989 and is headquartered in Princeton, New Jersey.

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