ZACKSยท2025-10-27 17:41Industry Overview - The Zacks Utility - Electric Power industry offers stable, long-term income due to its regulated framework, allowing companies to recover costs and earn steady returns, thus reducing earnings volatility [1] - The U.S. electric utilities industry is evolving beyond its traditional role as a steady income provider, driven by investments in clean energy, grid modernization, and electrification, supported by federal incentives and climate policies [2] Company Profiles - NextEra Energy (NEE) focuses on renewable energy and sustainable growth, managing one of the largest portfolios of wind and solar projects globally, backed by solid financials and innovation [3] - American Electric Power (AEP) benefits from regulated operations and a commitment to clean energy, investing in renewable and nuclear generation, grid modernization, and transmission upgrades [4] Earnings Growth Projections - NextEra Energy's earnings per share (EPS) estimates for 2025 and 2026 have increased by 7.29% and 7.95% year over year, with long-term growth projected at 8.04% [6] - American Electric Power's EPS estimates for 2025 and 2026 have increased by 4.98% and 6.47% year over year, with long-term growth projected at 6.43% [9] Financial Metrics - NextEra Energy has a return on equity (ROE) of 12.31%, compared to AEP's 11.55%, both exceeding the industry average of 10.35% [7][13] - NextEra Energy's debt-to-capital ratio is 60.48%, while AEP's is 59.78%, both slightly below the industry average of 61.16% [12] Capital Expenditure Plans - NextEra Energy plans to invest approximately $74.6 billion from 2025 to 2029 for infrastructure and clean electricity generation [17] - American Electric Power plans to invest $54 billion during the same period for electric transmission, distribution, and generation infrastructure [17] Dividend Yield - NextEra Energy's current dividend yield is 2.68%, while American Electric Power's is 3.21%, both higher than the S&P 500's yield of 1.49% [19] Valuation - NextEra Energy trades at a Price/Earnings Forward 12-month ratio of 21.53X, while American Electric Power trades at 18.67X, compared to the industry's 15.45X [20] Price Performance - NextEra Energy has gained 18.2% in the last three months, outperforming American Electric Power's 7.3% increase during the same period [21] Conclusion - NextEra Energy shows stronger earnings estimates, higher ROE, and a larger capital expenditure plan, positioning it as a more favorable investment choice in the utility sector compared to American Electric Power [23]