NextEra Energy (NYSE:NEE) versus RWE (OTCMKTS:RWEOY) Financial Analysis

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

Volatility and Risk

NextEra Energy has a beta of 0.63, meaning that its stock price is 37% less volatile than the S&P 500. Comparatively, RWE has a beta of 0.7, meaning that its stock price is 30% less volatile than the S&P 500.

Institutional and Insider Ownership

78.7% of NextEra Energy shares are owned by institutional investors. 0.2% of NextEra Energy shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
NextEra Energy	22.84%	12.31%	3.86%
RWE	16.82%	5.78%	2.05%

Earnings and Valuation

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
NextEra Energy	$24.75 billion	6.02	$6.95 billion	$2.86	25.32
RWE	$26.22 billion	N/A	$5.56 billion	$5.82	7.20

NextEra Energy has higher earnings, but lower revenue than RWE. RWE 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

NextEra Energy pays an annual dividend of $2.27 per share and has a dividend yield of 3.1%. RWE pays an annual dividend of $0.88 per share and has a dividend yield of 2.1%. NextEra Energy pays out 79.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. RWE pays out 15.1% of its earnings in the form of a dividend. NextEra Energy has raised its dividend for 31 consecutive years. NextEra Energy is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Ratings

This is a summary of current recommendations for NextEra Energy and RWE, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
NextEra Energy	0	7	8	0	2.53
RWE	0	0	1	1	3.50

NextEra Energy presently has a consensus price target of $84.4167, suggesting a potential upside of 16.57%. Given NextEra Energy’s higher possible upside, analysts clearly believe NextEra Energy is more favorable than RWE.

Summary

NextEra Energy beats RWE on 11 of the 17 factors compared between the two stocks.

About NextEra Energy

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,natural gas, and other clean energy. It also develops, constructs, and operates long-term contracted assets that consists of clean energy solutions, such as renewable generation facilities, battery storage projects, and electric transmission facilities; sells energy commodities; and owns, develops, constructs, manages and operates electric generation facilities in wholesale energy markets. The company had approximately 33,276 megawatts of net generating capacity; approximately 90,000 circuit miles of transmission and distribution lines; and 883 substations. It serves approximately 12 million people through approximately 5.9 million customer accounts in the east and lower west coasts of Florida. 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.

About RWE

RWE Aktiengesellschaft generates and supplies electricity from renewable and conventional sources in Germany, the United Kingdom, rest of Europe, North America, and internationally. It operates through five segments: Offshore Wind; Onshore Wind/Solar; Hydro/Biomass/Gas; Supply & Trading; and Coal/Nuclear. The company generates wind, hydro, solar, nuclear, gas, and biomass electricity. It also trades in electricity, gas, and energy commodities; operates gas storage facilities; and engages in battery storage activities. The company serves commercial, industrial, and corporate customers. RWE Aktiengesellschaft was founded in 1898 and is headquartered in Essen, Germany.