Analyzing Edison International (NYSE:EIX) and NRG Energy (NYSE:NRG)

Edison International (NYSE:EIXGet Free Report) and NRG Energy (NYSE:NRGGet Free Report) are both large-cap utilities companies, but which is the superior business? We will compare the two companies based on the strength of their valuation, dividends, risk, institutional ownership, earnings, profitability and analyst recommendations.

Profitability

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

Net Margins Return on Equity Return on Assets
Edison International 6.14% 12.48% 2.44%
NRG Energy 5.76% 42.60% 4.11%

Dividends

Edison International pays an annual dividend of $3.12 per share and has a dividend yield of 4.2%. NRG Energy pays an annual dividend of $1.63 per share and has a dividend yield of 2.0%. Edison International pays out 136.8% 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 23.1% of its earnings in the form of a dividend. Edison International has increased its dividend for 21 consecutive years and NRG Energy has increased its dividend for 5 consecutive years. Edison International is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Recommendations

This is a breakdown of current recommendations for Edison International and NRG Energy, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Edison International 1 4 5 0 2.40
NRG Energy 0 4 3 0 2.43

Edison International currently has a consensus price target of $76.00, suggesting a potential upside of 1.81%. NRG Energy has a consensus price target of $65.50, suggesting a potential downside of 19.35%. Given Edison International’s higher probable upside, analysts plainly believe Edison International is more favorable than NRG Energy.

Earnings & Valuation

This table compares Edison International and NRG Energy’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Edison International $16.34 billion 1.75 $1.41 billion $2.28 32.68
NRG Energy $28.82 billion 0.59 -$202.00 million $7.06 11.54

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

Insider and Institutional Ownership

89.0% of Edison International shares are held by institutional investors. Comparatively, 97.7% of NRG Energy shares are held by institutional investors. 1.0% of Edison International shares are held by company insiders. Comparatively, 0.9% of NRG Energy shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Risk & Volatility

Edison International has a beta of 0.95, meaning that its stock price is 5% less volatile than the S&P 500. Comparatively, NRG Energy has a beta of 1.11, meaning that its stock price is 11% more volatile than the S&P 500.

Summary

Edison International beats NRG Energy on 9 of the 17 factors compared between the two stocks.

About Edison International

(Get Free Report)

Edison International, through its subsidiaries, engages in the generation and distribution of electric power. The company supplies and delivers electricity to approximately 50,000 square mile area of southern California to residential, commercial, industrial, public authorities, agricultural, and other sectors. Its transmission facilities consist of lines ranging from 55 kV to 500 kV and approximately 80 transmission substations; distribution system consists of approximately 38,000 circuit-miles of overhead lines; approximately 31,000 circuit-miles of underground lines; and 730 distribution substations. The company was founded in 1886 and is based in Rosemead, California.

About NRG Energy

(Get Free Report)

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.

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