Dynegy (NYSE: DYN) and NRG Yield (NYSE:NYLD) are both small-cap utilities companies, but which is the better stock? We will contrast the two companies based on the strength of their valuation, analyst recommendations, risk, earnings, institutional ownership, profitabiliy and dividends.
Volatility and Risk
Dynegy has a beta of 1.85, meaning that its share price is 85% more volatile than the S&P 500. Comparatively, NRG Yield has a beta of 2.55, meaning that its share price is 155% more volatile than the S&P 500.
This is a breakdown of current recommendations for Dynegy and NRG Yield, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
Dynegy presently has a consensus target price of $11.40, indicating a potential upside of 27.37%. NRG Yield has a consensus target price of $20.00, indicating a potential upside of 7.82%. Given Dynegy’s higher probable upside, research analysts clearly believe Dynegy is more favorable than NRG Yield.
Earnings and Valuation
This table compares Dynegy and NRG Yield’s top-line revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Dynegy||$4.44 billion||0.26||$833.00 million||($6.21)||-1.44|
|NRG Yield||$1.01 billion||1.80||$755.00 million||$0.48||38.65|
Dynegy has higher revenue and earnings than NRG Yield. Dynegy is trading at a lower price-to-earnings ratio than NRG Yield, indicating that it is currently the more affordable of the two stocks.
NRG Yield pays an annual dividend of $1.08 per share and has a dividend yield of 5.8%. Dynegy does not pay a dividend. NRG Yield pays out 225.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.
Insider & Institutional Ownership
32.3% of NRG Yield shares are held by institutional investors. 1.8% of Dynegy shares are held by insiders. Comparatively, 0.2% of NRG Yield shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.
This table compares Dynegy and NRG Yield’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
NRG Yield beats Dynegy on 10 of the 15 factors compared between the two stocks.
Dynegy Inc. (Dynegy) is a holding company and conducts the business operations through its subsidiaries. The primary business of Dynegy is the production and sale of electric energy, capacity and ancillary services from the fleet of 18 operating power plants in six states totaling approximately 12,300 megawatt (MW) of generating capacity. Dynegy sells electric energy, capacity and ancillary services on a wholesale basis from its power generation facilities. Its customers include Regional Transmission Organization (RTOs) and Independent System Operators (ISOs), integrated utilities, municipalities, electric cooperatives, transmission and distribution utilities, industrial customers, power marketers, financial participants, such as banks and hedge funds, other power generators and commercial end-users. It has three segments: Midwest segment (GEN-MW), West segment (GEN-WE) and Northeast segment (GEN-NE). Its wholly owned subsidiary is Dynegy Holdings Inc. (DHI).
About NRG Yield
NRG Yield, Inc. serves as the primary vehicle, through which NRG Energy, Inc. owns, operates and acquires contracted renewable and conventional generation and thermal infrastructure assets. It owns a diversified portfolio of contracted renewable and conventional generation and thermal infrastructure assets in the United States. Its contracted generation portfolio includes three natural gas or dual-fired facilities, eight utility-scale solar and wind generation facilities and two portfolios of distributed solar facilities that collectively represent 1,324 net megawatt. The Company also own thermal infrastructure assets with an aggregate steam and chilled water capacity of 1,098 net megawatt and electric generation capacity of 123 net megawatt. In July 2014, NRG Yield Inc completed its acquisition of three Right of First Offer (ROFO) assets from NRG Energy, Inc. In August 2014, it acquired Alta Wind facility located in Tehachapi, California from Terra-Gen Power LLC.
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