The Zacks Utility-Electric Power industry players generate and deliver electricity to millions of customers across the United States. Utilities are steadily transitioning toward cleaner fuel sources and placing greater emphasis on lowering carbon emissions, aided by government initiatives that support the shift to cleaner power generation. Alongside sustainability efforts, utilities are investing in grid modernization and strengthening transmission and distribution infrastructure. With hurricanes posing recurring annual risks, year-round infrastructure upgrades enhance system resilience, reduce outages and enable quicker power restoration for customers affected by storms.

FirstEnergy Corp. (FE Quick QuoteFE - Free Report) , with its extensive transmission and distribution assets, efficiently serves millions of customers across the United States. The company also operates 3,600 megawatts (“MW”) of generation assets. Other utilities worth adding to your portfolio are NiSource Inc. (NI Quick QuoteNI - Free Report) , Northwestern Energy Group (NWE Quick QuoteNWE - Free Report) and Otter Tail Corporation (OTTR Quick QuoteOTTR - Free Report) .

About the Industry

The Utility-Electric Power industry is responsible for generating, transmitting, distributing, storing and retailing electricity to consumers. Demand for utility services is generally stable across economic cycles, although it can fluctuate due to unusual weather conditions, since periods of extreme heat or cold typically increase electricity usage. The industry is currently undergoing a major transition as more companies move toward zero-emission goals. Increase in internet usage, rising adoption of electric vehicles, reshoring of certain industries and the rapid expansion of artificial intelligence are expected to boost power demand. AI-based data centers in particular require far more electricity than traditional online activities such as streaming music or browsing photos. In addition, lower interest rates provide a supportive backdrop for this capital-intensive industry.

3 Powerful Trends Reshaping the Electric Power Industry

Increasing Demand and Prices for Electricity: Per the U.S. Energy Information Administration (“EIA”), demand for electricity is expected to increase in the country. The demand is expected to increase 1.2% in 2026 to reach 4,108 billion kilowatt-hours (BkWh). In 2027, electricity demand is expected to rise 3.3% to 4,244 BkWh. Per EIA, the price of average electricity to be provided to customers in the industrial, commercial and residential sectors will increase 1.9%, 3.6% and 5.1%, respectively, in 2026. The same trend is expected to continue in 2027 as well, boosting the revenues of the companies operating in this space. Demand for electricity is rising in the United States due to a surge in domestic manufacturing, higher usage of electric vehicles, the development of data centers and AI, and an increase in residential usage.

Utilities Embrace Rapid Shift to Renewable Energy: Utilities are benefiting from the ongoing shift toward renewable energy as they increase capacity from wind, solar and other clean sources while gradually cutting emissions. Many firms are also phasing out aging coal-fired plants to meet stricter environmental standards and enhance operational efficiency. This transition is reducing overall carbon intensity and drawing sustained investor interest, as utilities upgrade grid infrastructure and position themselves for long-term growth in sustainable electricity demand. 

Advancements in technology are sharply reducing the cost of generating electricity from renewable sources, while improvements in grid management software are making clean energy more reliable and cost-competitive. Utility-scale renewable projects are increasingly able to match the economics of traditional fossil fuel-based power generation.

Interest Rate Relief Enhances Growth Potential: Stable, low interest rates have created a favorable environment for capital-intensive utility companies. Since utilities require significant ongoing investment in power plants, transmission lines and renewable energy infrastructure, lower borrowing costs help reduce financing expenses and improve project economics. This allows companies to fund large-scale expansion more efficiently while supporting earnings stability. In addition, predictable interest rates enhance visibility on future cash flows, making utility stocks more attractive to income-focused investors seeking steady returns and lower volatility.

 

Zacks Industry Rank Indicates Bright Prospects

The group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates upbeat near-term prospects. The 56-stock Utility-Electric Power industry is housed within the broader Zacks Utilities sector and currently carries a Zacks Industry Rank #88, which places it in the top 36% of more than 243 Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than two to one.

The industry’s positioning in the top 50% of the Zacks Rank industries is a result of a positive earnings outlook for the constituent companies in aggregate. The industry’s recent earnings estimate reflects optimism from the analysts. Its earnings estimates for 2026 have moved up 5.3% since May 31, 2025.

Before we present a few Utility-Electric Power stocks that you may want to consider for your portfolio, let us take a look at the industry’s recent stock-market performance and current valuation.

Electric Power Industry Beats the Sector but Lags the S&P 500

The Utility Electric Power industry has surpassed its own sector but lagged the Zacks S&P 500 composite’s rally over the past 12 months. The industry has gained 31.6% compared with its sector’s 27.8% rally. The Zacks S&P 500 composite has gained 42.8% in the same period.

Price Performance (One year)

 

Electric Power Industry's Current Valuation

On the basis of EV/EBITDA (Enterprise Value/ Earnings before Interest Tax Depreciation and Amortization) TTM, which is a commonly used multiple for valuing Utility Electric Power companies, the industry is trading at 16.23X compared with the S&P 500’s 18.64X and the Utility sector’s 14.63X.

Over the past five years, the industry has traded as high as 21.31X, as low as 12.58X and at the median of 15.61X.

Industry EV/EBITDA TTM vs S&P 500 (5yrs)

Industry EV/EBITDA TTM vs Sector (5yrs)

 

4 Electric Power Industry Stocks to Buy

Utilities is a mature sector and all the stocks selected from the Zacks Utility-Electric Power industry currently have a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks Rank #1 (Strong Buy) stocks here.

FirstEnergy Corp: Akron, OH-based FirstEnergy, its subsidiaries and affiliates, engages in the transmission, distribution and generation of electricity. The firm has successfully expanded its regulated activities and undergone a complete transition to become a fully regulated utility company in the past few years. FirstEnergy has increased the 2026-2030 capital plan by 30% to $36 billion to strengthen its infrastructure and efficiently serve customers.

FE’s long-term (three to five years) earnings growth is pegged at 7.64%. The current dividend yield for FE is 3.55%, which is better than the industry’s yield of 2.81%. The Zacks Consensus Estimate for FirstEnergy’s 2026 earnings per share indicates growth of nearly 0.4% in the past 60 days.

Price and Consensus: FE

NiSource Inc: Merrillville, IN-based NiSource, with its subsidiaries, provides natural gas, electricity and other products and services in the United States. Its operating subsidiaries deliver energy to nearly 4 million customers in six states. NiSource’s earnings benefit from the new electric and gas rates that came into effect in its service region. The company anticipates a capital expenditure of $28 billion for 2026-2030. The consolidated capital expenditure plan includes utility system modernization initiatives and roughly $7 billion in strategic data center infrastructure investments.

NI’s long-term earnings growth is pegged at 5.97%. The current dividend yield for NI is 2.48. The Zacks Consensus Estimate for NiSource’s 2026 earnings per share indicates growth of nearly 0.5% in the past 60 days.

Price and Consensus: NI

NorthWestern Energy Group: Sioux Falls, SD-based company, supplies electricity and natural gas to residential, commercial and a broad range of industrial customers. NEW plans to invest $3.21 billion in five years to strengthen its infrastructure. The company is poised to benefit from the rising demand from data centers. 

NIWE’s long-term earnings growth is pegged at 6.35%. The current dividend yield for NorthWestern Energy is 3.7. The Zacks Consensus Estimate for NorthWestern Energy’s 2026 earnings per share indicates growth of nearly 0.26% in the past 60 days.

Price and Consensus: NWE

Otter Tail Corporation: A Fergus Falls, MN-based company, along with its subsidiaries, engages in electric utility, manufacturing and plastic pipe businesses in the United States. OTTR plans to invest $2.05 billion in the 2026-2030 period to further strengthen its generation, transmission and distribution network.

OTTR’s current dividend yield is 2.62. The Zacks Consensus Estimate for Otter Tail’s 2026 earnings per share indicates growth of 4.38% in the past 60 days

Price and Consensus :OTTR