Head-To-Head Review: NRG Energy (NYSE:NRG) versus MGE Energy (NASDAQ:MGEE)

NRG Energy (NYSE:NRG) and MGE Energy (NASDAQ:MGEE) are both utilities companies, but which is the better stock? We will compare the two businesses based on the strength of their earnings, dividends, analyst recommendations, valuation, profitability, risk and institutional ownership.

Dividends

NRG Energy pays an annual dividend of $1.90 per share and has a dividend yield of 1.5%. MGE Energy pays an annual dividend of $1.90 per share and has a dividend yield of 2.5%. NRG Energy pays out 223.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. MGE Energy pays out 48.7% of its earnings in the form of a dividend. NRG Energy has raised its dividend for 1 consecutive years and MGE Energy has raised its dividend for 49 consecutive years. MGE Energy is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
NRG Energy	0.74%	70.67%	4.95%
MGE Energy	18.61%	10.94%	4.68%

Volatility and Risk

NRG Energy has a beta of 1.24, meaning that its share price is 24% more volatile than the S&P 500. Comparatively, MGE Energy has a beta of 0.73, meaning that its share price is 27% less volatile than the S&P 500.

Insider & Institutional Ownership

97.7% of NRG Energy shares are owned by institutional investors. Comparatively, 52.6% of MGE Energy shares are owned by institutional investors. 0.4% of NRG Energy shares are owned by company insiders. Comparatively, 0.4% of MGE Energy shares are owned 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.

Earnings & Valuation

This table compares NRG Energy and MGE Energy”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
NRG Energy	$30.71 billion	0.85	$864.00 million	$0.85	145.65
MGE Energy	$743.65 million	3.79	$135.89 million	$3.90	19.67

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

Analyst Recommendations

This is a summary of recent ratings and recommmendations for NRG Energy and MGE Energy, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
NRG Energy	0	4	10	1	2.80
MGE Energy	1	1	1	0	2.00

NRG Energy presently has a consensus target price of $199.69, suggesting a potential upside of 61.30%. MGE Energy has a consensus target price of $75.50, suggesting a potential downside of 1.56%. Given NRG Energy’s stronger consensus rating and higher probable upside, analysts plainly believe NRG Energy is more favorable than MGE Energy.

Summary

NRG Energy beats MGE Energy on 12 of the 18 factors compared between the two stocks.

About NRG Energy

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.

About MGE Energy

MGE Energy, Inc., through its subsidiaries, operates as a public utility holding company primarily in the United States. It operates through Regulated Electric Utility Operations; Regulated Gas Utility Operations; Nonregulated Energy Operations; Transmission Investments; and All Other segments. The company generates, purchases, and distributes electricity and natural gas in Wisconsin and Iowa; owns and leases electric generating capacity; and plans, constructs, operates, maintains, and expands transmission facilities to provide transmission power services. It generates electricity from coal-fired, gas-fired, and renewable energy sources. As of December 31, 2023, the company owned and operated 835 miles of overhead electric distribution lines; 1,330 miles of underground electric distribution cables; 49 substations with an installed capacity of 1.2 million kVA; and gas facilities, including 3,066 miles of distribution mains, as well as supplied electric service to approximately 163,000 customers. MGE Energy, Inc. founded in 2001 and is headquartered in Madison, Wisconsin.