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NRG vs. NEE: Which Utility Stock Is the Smarter Investment for Now?
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Key Takeaways
NRG shows rising earnings estimates for 2025-2026 while NEE's forecasts remain unchanged.
NRG posts a 103.57% ROE versus NEE's 12.42%, well above the industry's 10.09%.
NRG's shares have jumped 81.8% over the past year, outpacing NEE and the broader industry.
The companies operating in the Zacks Utility – Electric Power industry present an attractive investment opportunity, supported by steady cash flows and the stability of regulated business models. Many domestically focused utilities benefit from long-term power purchase agreements, which help shield their revenues from wider economic fluctuations. The ongoing capital investments are enhancing operational efficiency. These companies are well-positioned to generate consistent earnings and uphold reliable dividend payments.
The Electric Power industry is in the midst of a major transition toward cleaner energy sources. Utilities are directing more capital into renewable infrastructure such as solar, wind, nuclear, battery storage and grid modernization. As global decarbonization efforts accelerate, early movers in low-carbon technologies are securing a competitive edge.
These capital-intensive utilities stand to gain from the Federal Reserve’s interest rate cuts, which help lower financing costs for large-scale projects. In the evolving electric power market, let us focus and compare NextEra Energy (NEE - Free Report) and NRG Energy (NRG - Free Report) . Both are U.S. electric utilities which are investing in increasing clean electricity generation and taking initiatives to strengthen the grid.
NextEra Energy remains a leading clean energy investment, combining steady performance with robust growth potential. The company’s regulated utility arm, Florida Power & Light, delivers reliable cash flows through its stable, rate-regulated operations. Another unit, NextEra Energy Resources, produces electricity from wind and solar power, and fuels long-term expansion through its extensive clean energy and battery storage portfolio. With a clear emphasis on decarbonization and disciplined capital deployment, NEE is well-positioned to continue outperforming as the energy sector transitions toward cleaner technologies.
NRG Energy offers an attractive investment profile, supported by its integrated power model and strong decarbonization strategy. The company generates stable cash flows from its retail electricity business while advancing ambitious climate goals, including a net-zero emissions target by 2050. Ongoing portfolio optimization and investments in cleaner generation enhance operational efficiency and bolster long-term growth prospects. With a well-balanced mix of conventional and renewable assets, NRG is well placed to benefit from both market stability and the accelerating global shift toward cleaner energy.
Both companies mentioned above are operators in the Zacks Utilities sector; a closer examination of their fundamentals is essential. A comprehensive comparison will provide valuable insight into which stock presents a more compelling investment opportunity for investors.
NRG & NEE’s Earnings Growth Projections
The Zacks Consensus Estimate for NRG Energy’s earnings per share in 2025 and 2026 has increased 2.26% and 9.70%, respectively, in the past 60 days.
Image Source: Zacks Investment Research
The same for NextEra Energy’s earnings per share in 2025 and 2026 has remained unchanged in the past 60 days. Long-term (three to five years) earnings growth per share is pegged at 8.08%.
Image Source: Zacks Investment Research
Return on Equity
Return on equity (“ROE”) is an essential financial indicator that evaluates a company’s efficiency in generating profits from the equity invested by its shareholders. It demonstrates how well management is utilizing the capital provided to increase earnings and deliver value.
NRG’s current ROE is 103.57% compared with NEE’s 12.42%. Both companies outperform the industry’s ROE of 10.09%.
Image Source: Zacks Investment Research
Debt to Capital
The Utilities sector is a capital-intensive one and huge investments are required at regular intervals to upgrade, maintain and expand operations. The usage of new evolving technology also requires investments. Therefore, utilities borrow from the market and add it to their internal cash generation to fund long-term investments. The Federal Reserve has lowered the interest rates to a range of 3.75-4%, which will benefit the utilities.
NRG Energy’s debt-to-capital currently stands at 85.83% compared with NextEra Energy’s 59.04%. NEE’s debt level is a tad lower than the industry, which stands at 59.51%.
Times Interest Earned Ratio
The Times Interest Earned ratio (“TIE”) measures the ability of the company to pay interest expenses from its earnings. NRG and NEE have substantial debts in their balance sheet, so a strong TIE would indicate that these companies can address the interest payment obligations.
At present, NRG has a TIE ratio of 3.9 and NEE has 2.3, indicating that both companies can easily meet interest obligations from their earnings without any problems.
Valuation
NextEra Energy currently appears to be trading at a slightly higher premium compared with NRG Energy on a Price/Earnings Forward 12-month basis. (P/E- F12M).
NEE is currently trading at 21.19X, while NRG is trading at 15.65X compared with the industry’s 15.16X.
Image Source: Zacks Investment Research
Price Performance
NRG Energy’s shares have gained 81.8% in the last year compared with NextEra Energy’s rally of 10% and the industry’s return of 17%.
Image Source: Zacks Investment Research
Summing Up
NRG Energy and NextEra Energy are investing steadily in their infrastructure to serve customers more efficiently.
NRG currently has a VGM Score of B compared with NEE’s score of D. Its score indicates a better growth forecast, promising momentum and attractive value compared with NEE. In addition, NRG's higher ROE and increasing earnings estimates make it a better choice in the utility space. NRG Energy also has a cheaper valuation compared with NextEra Energy.
Based on the above discussion, NRG Energy currently has a marginal edge over NextEra Energy, despite both stocks carrying a Zacks Rank #3 (Hold).
Image: Bigstock
NRG vs. NEE: Which Utility Stock Is the Smarter Investment for Now?
Key Takeaways
The companies operating in the Zacks Utility – Electric Power industry present an attractive investment opportunity, supported by steady cash flows and the stability of regulated business models. Many domestically focused utilities benefit from long-term power purchase agreements, which help shield their revenues from wider economic fluctuations. The ongoing capital investments are enhancing operational efficiency. These companies are well-positioned to generate consistent earnings and uphold reliable dividend payments.
The Electric Power industry is in the midst of a major transition toward cleaner energy sources. Utilities are directing more capital into renewable infrastructure such as solar, wind, nuclear, battery storage and grid modernization. As global decarbonization efforts accelerate, early movers in low-carbon technologies are securing a competitive edge.
These capital-intensive utilities stand to gain from the Federal Reserve’s interest rate cuts, which help lower financing costs for large-scale projects. In the evolving electric power market, let us focus and compare NextEra Energy (NEE - Free Report) and NRG Energy (NRG - Free Report) . Both are U.S. electric utilities which are investing in increasing clean electricity generation and taking initiatives to strengthen the grid.
NextEra Energy remains a leading clean energy investment, combining steady performance with robust growth potential. The company’s regulated utility arm, Florida Power & Light, delivers reliable cash flows through its stable, rate-regulated operations. Another unit, NextEra Energy Resources, produces electricity from wind and solar power, and fuels long-term expansion through its extensive clean energy and battery storage portfolio. With a clear emphasis on decarbonization and disciplined capital deployment, NEE is well-positioned to continue outperforming as the energy sector transitions toward cleaner technologies.
NRG Energy offers an attractive investment profile, supported by its integrated power model and strong decarbonization strategy. The company generates stable cash flows from its retail electricity business while advancing ambitious climate goals, including a net-zero emissions target by 2050. Ongoing portfolio optimization and investments in cleaner generation enhance operational efficiency and bolster long-term growth prospects. With a well-balanced mix of conventional and renewable assets, NRG is well placed to benefit from both market stability and the accelerating global shift toward cleaner energy.
Both companies mentioned above are operators in the Zacks Utilities sector; a closer examination of their fundamentals is essential. A comprehensive comparison will provide valuable insight into which stock presents a more compelling investment opportunity for investors.
NRG & NEE’s Earnings Growth Projections
The Zacks Consensus Estimate for NRG Energy’s earnings per share in 2025 and 2026 has increased 2.26% and 9.70%, respectively, in the past 60 days.
Image Source: Zacks Investment Research
The same for NextEra Energy’s earnings per share in 2025 and 2026 has remained unchanged in the past 60 days. Long-term (three to five years) earnings growth per share is pegged at 8.08%.
Image Source: Zacks Investment Research
Return on Equity
Return on equity (“ROE”) is an essential financial indicator that evaluates a company’s efficiency in generating profits from the equity invested by its shareholders. It demonstrates how well management is utilizing the capital provided to increase earnings and deliver value.
NRG’s current ROE is 103.57% compared with NEE’s 12.42%. Both companies outperform the industry’s ROE of 10.09%.
Image Source: Zacks Investment Research
Debt to Capital
The Utilities sector is a capital-intensive one and huge investments are required at regular intervals to upgrade, maintain and expand operations. The usage of new evolving technology also requires investments. Therefore, utilities borrow from the market and add it to their internal cash generation to fund long-term investments. The Federal Reserve has lowered the interest rates to a range of 3.75-4%, which will benefit the utilities.
NRG Energy’s debt-to-capital currently stands at 85.83% compared with NextEra Energy’s 59.04%. NEE’s debt level is a tad lower than the industry, which stands at 59.51%.
Times Interest Earned Ratio
The Times Interest Earned ratio (“TIE”) measures the ability of the company to pay interest expenses from its earnings. NRG and NEE have substantial debts in their balance sheet, so a strong TIE would indicate that these companies can address the interest payment obligations.
At present, NRG has a TIE ratio of 3.9 and NEE has 2.3, indicating that both companies can easily meet interest obligations from their earnings without any problems.
Valuation
NextEra Energy currently appears to be trading at a slightly higher premium compared with NRG Energy on a Price/Earnings Forward 12-month basis. (P/E- F12M).
NEE is currently trading at 21.19X, while NRG is trading at 15.65X compared with the industry’s 15.16X.
Image Source: Zacks Investment Research
Price Performance
NRG Energy’s shares have gained 81.8% in the last year compared with NextEra Energy’s rally of 10% and the industry’s return of 17%.
Image Source: Zacks Investment Research
Summing Up
NRG Energy and NextEra Energy are investing steadily in their infrastructure to serve customers more efficiently.
NRG currently has a VGM Score of B compared with NEE’s score of D. Its score indicates a better growth forecast, promising momentum and attractive value compared with NEE. In addition, NRG's higher ROE and increasing earnings estimates make it a better choice in the utility space. NRG Energy also has a cheaper valuation compared with NextEra Energy.
Based on the above discussion, NRG Energy currently has a marginal edge over NextEra Energy, despite both stocks carrying a Zacks Rank #3 (Hold).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.