Financial Review: WEC Energy Group (NYSE:WEC) vs. NRG Energy (NYSE:NRG)

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

Volatility and Risk

WEC Energy Group has a beta of 0.5, indicating that its stock price is 50% less volatile than the S&P 500. Comparatively, NRG Energy has a beta of 1.32, indicating that its stock price is 32% more volatile than the S&P 500.

Insider and Institutional Ownership

77.2% of WEC Energy Group shares are held by institutional investors. Comparatively, 97.7% of NRG Energy shares are held by institutional investors. 0.5% of WEC Energy Group shares are held by insiders. Comparatively, 0.4% of NRG Energy shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Dividends

WEC Energy Group pays an annual dividend of $3.81 per share and has a dividend yield of 3.4%. NRG Energy pays an annual dividend of $1.90 per share and has a dividend yield of 1.5%. WEC Energy Group pays out 76.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. NRG Energy pays out 223.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. WEC Energy Group has raised its dividend for 23 consecutive years and NRG Energy has raised its dividend for 1 consecutive years. WEC Energy Group is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Ratings

This is a breakdown of current recommendations for WEC Energy Group and NRG Energy, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
WEC Energy Group	1	9	8	1	2.47
NRG Energy	0	4	10	1	2.80

WEC Energy Group presently has a consensus target price of $122.13, indicating a potential upside of 9.55%. NRG Energy has a consensus target price of $199.46, indicating a potential upside of 60.98%. Given NRG Energy’s stronger consensus rating and higher probable upside, analysts plainly believe NRG Energy is more favorable than WEC Energy Group.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
WEC Energy Group	16.25%	12.72%	3.55%
NRG Energy	0.74%	70.67%	4.95%

Earnings & Valuation

This table compares WEC Energy Group 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
WEC Energy Group	$9.80 billion	3.71	$1.56 billion	$5.01	22.25
NRG Energy	$30.71 billion	0.85	$864.00 million	$0.85	145.77

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

Summary

NRG Energy beats WEC Energy Group on 9 of the 17 factors compared between the two stocks.

About WEC Energy Group

WEC Energy Group, Inc., through its subsidiaries, provides regulated natural gas and electricity, and renewable and nonregulated renewable energy services in the United States. It operates through Wisconsin, Illinois, Other States, Electric Transmission, and Non-Utility Energy Infrastructure segments. The company generates and distributes electricity from coal, natural gas, oil, and nuclear, as well as renewable energy resources, including wind, solar, hydroelectric, and biomass; and distributes and transports natural gas. It also owns, maintains, monitors, and operates electric transmission systems; and generates, distributes, and sells steam. As of December 31, 2023, the company operated approximately 35,500 miles of overhead distribution lines and 36,500 miles of underground distribution cables, as well as 430 electric distribution substations and 523,700 line transformers; approximately 46,400 miles of natural gas distribution mains; 1,700 miles of natural gas transmission mains; 2.4 million natural gas lateral services; 490 natural gas distribution and transmission gate stations; and 69.3 billion cubic feet of working gas capacities in underground natural gas storage fields. The company was formerly known as Wisconsin Energy Corporation and changed its name to WEC Energy Group, Inc. in June 2015. WEC Energy Group, Inc. was founded in 1896 and is headquartered in Milwaukee, Wisconsin.

About NRG Energy

NRG Energy, Inc., together with its subsidiaries, operates as an energy and home services company in the United States and Canada. It operates through Texas; East; West/Services/Other; Vivint Smart Home; and Corporate Activities segments. The company produces and sells electricity generated using coal, oil, solar, and battery storage; natural gas; and a cloud-based home platform, including hardware, software, sales, installation, customer service, technical support, and professional monitoring solutions. It offers retail electricity and energy management, line and surge protection products, HVAC installation, repair and maintenance, home protection products, carbon offsets, back-up power stations, portable power, portable solar, and portable lighting; retail services comprising demand response, commodity sales, energy efficiency, and energy management solutions; and system power, distributed generation, renewable and low-carbon products, carbon management and specialty services, backup generation, storage and distributed solar, and energy advisory services. In addition, the company trades in power, natural gas, and related commodities; environmental products; weather products; and financial products, including forwards, futures, options, and swaps. It offers its products and services under the NRG, Reliant, Direct Energy, Green Mountain Energy, and Vivint. It serves residential, commercial, government, industrial, and wholesale customers. NRG Energy, Inc. was founded in 1989 and is headquartered in Houston, Texas.