Is NextEra Energy The Best Electric Utility Stock To Buy Now?

Is NextEra Energy The Best Electric Utility Stock To Buy Now?

We think that OGE Energy - a company that provides electric utility services in Oklahoma and western Arkansas and owns midstream assets - is a better pick compared to NextEra Energy- the largest utility holding company by market cap. OGE stock trades at just 3. 3x trailing revenues, compared to 9. 3x for NEE. This gap in the valuation makes sense to a certain extent given NEE's massive holding of green generation assets such as solar and wind energy and its exposure to the promising Florida utility market. However, we believe that the gap in the valuation of both companies will narrow eventually, boding well for OGE stock. Both the companies have seen lower sales in the last year due to the Covid-19 pandemic. But now that nearly half of the U. S. population is fully vaccinated, the economy is rebounding nicely and this should bode well for electricity demand, auguring well for both the companies. However, there is more to the comparison. Let's step back to look at the fuller picture of the relative valuation of the two companies by looking at historical revenue growth as well as operating margin growth. Our dashboard OGE Energy vs NextEra Energy: Industry