VST vs. NRG: Which Utility Stock Deserves a Spot in Your Portfolio?

The companies operating in the Zacks Electric–Power industry are well positioned to benefit from the country’s accelerating clean energy transition and strong government support.

Rising electricity demand driven by electric vehicle adoption, AI-enabled data centers, expanding digital infrastructure, industrial reshoring and electrified heating continues to create demand and drive sector growth. Policies such as the Inflation Reduction Act (“IRA”) provide tax credits and grants that lower investment risk and enhance project economics for renewable energy and storage. Together, these incentives and decarbonization goals establish a solid foundation for sustained long-term growth across the industry.

Two major U.S. independent power producers, Vistra Corp. VST and NRG Energy NRG, are well positioned to gain from the shift toward cleaner electricity generation. Each maintains a diversified energy mix that includes natural gas, nuclear and renewable assets, while also investing in energy storage to enhance renewable reliability. With electricity demand increasing, particularly from data centers and AI-driven computing, both companies are expanding their generation capacity to support long-term growth.

NRG Energy presents a compelling investment case, backed by solid financial results and a forward-looking strategy that aligns with shifting energy market dynamics. The company is well equipped to serve rising electricity demand from data centers and AI-driven workloads. NRG Energy’s purchase of 18 natural gas power plants from LS Power is set to nearly double generation capacity to 25 gigawatts (“GW”), significantly expanding its ability to provide reliable power across nine states. With a clear emphasis on growth, resilience and sustainability, NRG Energy is positioned to deliver long-term value in an evolving energy landscape.

Vistra presents an attractive investment case due to its strong strategic positioning within the rapidly changing U.S. energy landscape. The company operates a diversified portfolio that includes natural gas, nuclear, solar and battery storage assets, totaling approximately 40.65 gigawatts of capacity. The acquisition of Energy Harbor has significantly expanded Vistra’s nuclear platform, strengthening its ability to meet rising demand for reliable, low-carbon electricity.

Both stocks mentioned above are strong operators in the utility space and will benefit from the Federal Reserve’s decision to reduce interest rates to the range of 3.5% to 3.75%. Let us dive deeper and closely compare the fundamentals of the two stocks to determine which is a better investment option for investors.

VST & NRG’s Earnings Growth Projections

The Zacks Consensus Estimate for Vistra’s 2026 earnings indicates year-over-year growth of 81.57%. Long-term (three to five years) earnings growth per share is pegged at 10.35%.

The same for NRG Energy’s 2026 and 2027 earnings implies year-over-year growth of 9.54% and 25.38%, respectively. 

Return on Equity

Return on Equity (“ROE”) is an important measure of financial performance that indicates how efficiently a company converts shareholder equity into profits. It highlights management’s effectiveness in utilizing invested capital to grow earnings and enhance shareholder value.

VST’s current ROE is 64.04% compared with NRG’s 109.48%, both outperforming the industry’s 10.7%.

NRG & VST’s Dividend Yield

Utility companies generally distribute dividends and increase shareholders’ value. Currently, the dividend yield for NRG Energy is 1.05%, while the same for Vistra is 0.51%.

Valuation

Vistra currently appears to trade at a premium compared with NRG Energy on a Price/Earnings Forward 12-month basis. (P/E- F12M).

VST and NRG are currently trading at 19.4X and 17.99X, respectively, compared with the industry’s 15.45X.

Price Performance

NRG Energy has gained 6.2% in the past three months against Vistra’s decline of 2.1%.

Price performance (Three months)

Rounding Up

NRG Energy and Vistra rank among the top U.S. energy providers, with clear commitments to expanding clean energy and supporting the country’s shift toward a low-carbon economy. Supported by well-defined strategies and strong market positions, both companies offer attractive long-term growth potential for investors looking to gain exposure to the transforming energy sector.

NRG Energy is currently showing better ROE, a higher dividend yield, stronger price performance and a cheaper valuation compared with Vistra.

Despite both companies currently having a Zacks Rank #3 (Hold), our pick is NRG Energy, considering the above-mentioned parameters.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

 

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This article originally published on Zacks Investment Research (zacks.com).

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