Contrasting Entergy (ETR) & NextEra Energy (NEE)

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Entergy (NYSE: ETR) and NextEra Energy (NYSE:NEE) are both large-cap utilities companies, but which is the better business? We will contrast the two businesses based on the strength of their analyst recommendations, dividends, profitability, risk, earnings, valuation and institutional ownership.

Profitability

This table compares Entergy and NextEra Energy’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Entergy 4.21% 16.19% 2.87%
NextEra Energy 48.13% 10.91% 3.42%

Risk & Volatility

Entergy has a beta of 0.46, indicating that its stock price is 54% less volatile than the S&P 500. Comparatively, NextEra Energy has a beta of 0.25, indicating that its stock price is 75% less volatile than the S&P 500.

Valuation and Earnings

This table compares Entergy and NextEra Energy’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Entergy $11.07 billion 1.32 $425.35 million $7.20 11.22
NextEra Energy $17.20 billion 4.57 $5.38 billion $6.70 24.93

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

Dividends

Entergy pays an annual dividend of $3.56 per share and has a dividend yield of 4.4%. NextEra Energy pays an annual dividend of $4.44 per share and has a dividend yield of 2.7%. Entergy pays out 49.4% of its earnings in the form of a dividend. NextEra Energy pays out 66.3% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Entergy has raised its dividend for 3 consecutive years and NextEra Energy has raised its dividend for 8 consecutive years. Entergy is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Ratings

This is a summary of recent ratings for Entergy and NextEra Energy, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Entergy 0 5 6 0 2.55
NextEra Energy 0 0 10 0 3.00

Entergy currently has a consensus price target of $84.95, suggesting a potential upside of 5.15%. NextEra Energy has a consensus price target of $169.50, suggesting a potential upside of 1.48%. Given Entergy’s higher possible upside, equities analysts clearly believe Entergy is more favorable than NextEra Energy.

Institutional and Insider Ownership

85.7% of Entergy shares are owned by institutional investors. Comparatively, 75.9% of NextEra Energy shares are owned by institutional investors. 0.2% of Entergy shares are owned by company insiders. Comparatively, 0.6% of NextEra Energy shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Summary

NextEra Energy beats Entergy on 10 of the 17 factors compared between the two stocks.

Entergy Company Profile

Entergy Corporation, together with its subsidiaries, engages in the production and distribution of electricity in the United States. It generates electricity through gas/oil, nuclear, coal, hydro, and solar power sources. The company's Utility segment generates, transmits, distributes, and sells electric power in portions of Arkansas, Mississippi, Texas, and Louisiana, including the City of New Orleans; and distributes natural gas. Its Entergy Wholesale Commodities segment engages in the ownership, operation, and decommissioning of nuclear power plants located in the northern United States; sale of electric power to wholesale customers; provision of services to other nuclear power plant owners; and owning interests in non-nuclear power plants that sell electric power to wholesale customers. This segment sells energy to retail power providers, utilities, electric power co-operatives, power trading organizations, and other power generation companies. The company's power plants have approximately 30,000 megawatts (MW) of electric generating capacity, including approximately 9,000 MW of nuclear power. The company delivers electricity to 2.9 million utility customers in Arkansas, Louisiana, Mississippi, and Texas. Entergy Corporation was founded in 1949 and is based in New Orleans, Louisiana.

NextEra Energy Company Profile

NextEra Energy, Inc., through its subsidiaries, generates, transmits, distributes, and sells electric power to retail and wholesale customers in North America. The company generates electricity through wind, solar, nuclear, and natural gas-fired facilities. It also provides risk management services related to power and gas consumption. As of February 16, 2018, the company operated approximately 46,790 megawatts of net generating capacity. As of December 31, 2017, it served approximately 10 million people through approximately 5 million customer accounts in the east and lower west coasts of Florida with approximately 75,000 circuit miles of transmission and distribution lines and approximately 620 substations. The company was formerly known as FPL Group, Inc. and changed its name to NextEra Energy, Inc. in 2010. NextEra Energy, Inc. was founded in 1925 and is headquartered in Juno Beach, Florida.

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