NRG Energy (NYSE:NRG) and CMS Energy (NYSE:CMS) Head-To-Head Survey

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

Analyst Recommendations

This is a breakdown of current ratings and target prices for NRG Energy and CMS Energy, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
NRG Energy	0	3	10	1	2.86
CMS Energy	0	6	7	0	2.54

NRG Energy presently has a consensus target price of $188.85, indicating a potential upside of 13.38%. CMS Energy has a consensus target price of $77.36, indicating a potential upside of 6.93%. Given NRG Energy’s stronger consensus rating and higher possible upside, equities research analysts plainly believe NRG Energy is more favorable than CMS Energy.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
NRG Energy	1.78%	88.22%	6.80%
CMS Energy	12.76%	12.07%	2.87%

Valuation and Earnings

This table compares NRG Energy and CMS Energy”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
NRG Energy	$28.13 billion	1.15	$1.13 billion	$2.21	75.37
CMS Energy	$7.52 billion	2.88	$1.00 billion	$3.38	21.41

NRG Energy has higher revenue and earnings than CMS Energy. CMS 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.

Dividends

NRG Energy pays an annual dividend of $1.76 per share and has a dividend yield of 1.1%. CMS Energy pays an annual dividend of $2.17 per share and has a dividend yield of 3.0%. NRG Energy pays out 79.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. CMS Energy pays out 64.2% of its earnings in the form of a dividend. NRG Energy has increased its dividend for 1 consecutive years and CMS Energy has increased its dividend for 3 consecutive years. CMS Energy is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Risk & Volatility

NRG Energy has a beta of 1.14, indicating that its stock price is 14% more volatile than the S&P 500. Comparatively, CMS Energy has a beta of 0.4, indicating that its stock price is 60% less volatile than the S&P 500.

Insider and Institutional Ownership

97.7% of NRG Energy shares are owned by institutional investors. Comparatively, 93.6% of CMS Energy shares are owned by institutional investors. 0.9% of NRG Energy shares are owned by company insiders. Comparatively, 0.4% of CMS Energy shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Summary

NRG Energy beats CMS 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 CMS Energy

CMS Energy Corporation operates as an energy company primarily in Michigan. The company operates through three segments: Electric Utility; Gas Utility; and Enterprises. The Electric Utility segment is involved in the generation, purchase, transmission, distribution, and sale of electricity. This segment generates electricity through coal, wind, gas, renewable energy, oil, and nuclear sources. Its distribution system comprises 208 miles of high-voltage distribution overhead lines; 4 miles of high-voltage distribution underground lines; 4,428 miles of high-voltage distribution overhead lines; 19 miles of high-voltage distribution underground lines; 82,474 miles of electric distribution overhead lines; 9,395 miles of underground distribution lines; 1,093 substations; and 3 battery facilities. The Gas Utility segment engages in the purchase, transmission, storage, distribution, and sale of natural gas, which includes 2,392 miles of transmission lines; 15 gas storage fields; 28,065 miles of distribution mains; and 8 compressor stations. The Enterprises segment is involved in the independent power production and marketing, including the development and operation of renewable generation. It serves 1.9 million electric and 1.8 million gas customers, including residential, commercial, and diversified industrial customers. The company was incorporated in 1987 and is headquartered in Jackson, Michigan.