NRG Yield (NYLD) vs. Xcel Energy (XEL) Head-To-Head Review

NRG Yield (NYSE: NYLD) and Xcel Energy (NYSE:XEL) are both mid-cap utilities companies, but which is the better business? We will compare the two companies based on the strength of their institutional ownership, profitability, analyst recommendations, valuation, earnings, risk and dividends.

Risk and Volatility

NRG Yield has a beta of 2.57, indicating that its share price is 157% more volatile than the S&P 500. Comparatively, Xcel Energy has a beta of 0.19, indicating that its share price is 81% less volatile than the S&P 500.

Profitability

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

Net Margins Return on Equity Return on Assets
NRG Yield 4.47% 1.89% 0.53%
Xcel Energy 10.08% 10.42% 2.80%

Institutional & Insider Ownership

28.3% of NRG Yield shares are owned by institutional investors. Comparatively, 72.5% of Xcel Energy shares are owned by institutional investors. 0.2% of NRG Yield shares are owned by company insiders. Comparatively, 0.2% of Xcel Energy shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Dividends

NRG Yield pays an annual dividend of $1.12 per share and has a dividend yield of 5.9%. Xcel Energy pays an annual dividend of $1.44 per share and has a dividend yield of 2.9%. NRG Yield pays out 248.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Xcel Energy pays out 63.4% of its earnings in the form of a dividend. Xcel Energy has increased its dividend for 13 consecutive years.

Earnings and Valuation

This table compares NRG Yield and Xcel Energy’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
NRG Yield $1.01 billion 1.20 $753.00 million $0.45 42.11
Xcel Energy $11.43 billion 2.19 $3.76 billion $2.27 21.70

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

Analyst Recommendations

This is a summary of current ratings and price targets for NRG Yield and Xcel Energy, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
NRG Yield 0 5 4 0 2.44
Xcel Energy 0 7 2 0 2.22

NRG Yield currently has a consensus price target of $19.83, indicating a potential upside of 4.66%. Xcel Energy has a consensus price target of $48.67, indicating a potential downside of 1.20%. Given NRG Yield’s stronger consensus rating and higher possible upside, analysts clearly believe NRG Yield is more favorable than Xcel Energy.

Summary

Xcel Energy beats NRG Yield on 11 of the 17 factors compared between the two stocks.

About NRG Yield

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 Xcel Energy

Xcel Energy Inc. is a public utility holding company. The Company’s operations include the activity of four utility subsidiaries that serve electric and natural gas customers in eight states. The Company’s segments include regulated electric utility, regulated natural gas utility and all other. The Company’s utility subsidiaries include NSP-Minnesota, NSP-Wisconsin, Public Service Company of Colorado (PSCo) and Southwestern Public Service Co. (SPS), which serve customers in portions of Colorado, Michigan, Minnesota, New Mexico, North Dakota, South Dakota, Texas and Wisconsin. Along with WYCO Development LLC (WYCO), a joint venture formed with Colorado Interstate Gas Company, LLC (CIG) to develop and lease natural gas pipelines storage and compression facilities, and WestGas InterState, Inc. (WGI), an interstate natural gas pipeline company, these companies comprise the regulated utility operations.

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