For Immediate Release
Chicago, IL – July 20, 2026 – Today, Zacks Equity Research discusses NextEra Energy NEE, Duke Energy Corp. DUK, American Electric Power AEP and Ameren Corp. AEE.
Industry: Electric Utility
The Zacks Utility-Electric Power industry players generate, transmit and deliver electricity to millions of customers across the United States. Utilities are steadily transitioning toward cleaner energy sources while prioritizing carbon emission reductions, supported by government initiatives that encourage the adoption of cleaner power generation. At the same time, they continue to invest in grid modernization and upgrade transmission and distribution infrastructure to improve reliability. As hurricanes remain a recurring annual threat, ongoing infrastructure enhancements strengthen grid resilience, minimize outage durations and enable faster power restoration for customers impacted by severe storms.
NextEra Energy, with its expanding clean power generation portfolio and customer base, renewable operations and well-chalked-out capital investments to strengthen infrastructure, offers an excellent opportunity to stay invested in the utility space. Other utilities worth adding to your portfolio are Duke Energy Corp., American Electric Power and Ameren Corp..
About the Industry
The Utility-Electric Power industry is responsible for the generation, transmission, distribution, storage and supply of electricity to consumers. Demand for utility services remains relatively stable across economic cycles, with variations largely influenced by weather, as extreme heat or cold typically drives demand higher. The sector is undergoing a major transformation, with a growing number of utilities pursuing zero-emission targets.
Meanwhile, rising internet usage, accelerating electric vehicle adoption, industrial reshoring and the rapid expansion of artificial intelligence are expected to significantly increase electricity demand, as AI applications require substantially more power than conventional online activities such as music streaming or web browsing. A low-interest-rate environment is favorable for this capital-intensive industry.
3 Trends Shaping the Future of the Electric Power Industry
Grid Congestion and Interconnection Delays : Demand for clean energy is rising across the United States due to the usage of new technology and the development of AI-based data centers. However, the existing transmission and distribution networks are yet to cope with the rapid increase in electricity demand. Per a report from Berkeley Lab, more than 2,000 gigawatts of power generation and storage capacity are currently in U.S. interconnection queues. Delays in interconnection and power delivery may hurt utilities' long-term prospects, prompting customers to seek reliable alternative energy sources to avoid project postponements.
Supply-Chain Constraints Slow Grid Modernization : Persistent supply-chain disruptions are slowing utility infrastructure expansion and driving up project costs. Extended lead times for critical equipment such as power transformers and switchgear, shortages of key raw materials like grain-oriented electrical steel and copper, and tariff-related cost pressures are limiting capacity additions. As a result, utilities face delays in grid modernization and clean energy projects, rising capital expenditures and pressure on long-term earnings growth, while prolonged delays may drive customers to seek alternative power sources.
Utilities Ramp Up Renewable Energy Expansion : U.S. electric power operators are steadily transitioning toward cleaner energy sources. According to the U.S. Energy Information Administration ("EIA"), the share of U.S. electricity generation from renewables is projected to increase from 24% in 2025 to 25% in 2026 and reach 27% in 2027, driven by continued growth in solar and wind capacity.
The Inflation Reduction Act is expected to further accelerate this shift by eliminating uncertainties around federal renewable energy incentives. By providing long-term, predictable support for a broad range of low-cost clean energy solutions, the act enhances earnings visibility and strengthens the utilities' pathway toward decarbonization. The ongoing development of large battery storage projects in the United States is supporting the renewable projects as it removes the intermittency of renewable energy.
Zacks Industry Rank Indicates Dull Prospects
The group's Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates weak near-term prospects. The 62-stock Utility-Electric Power industry is housed within the broader Zacks Utilities sector and currently carries a Zacks Industry Rank #158, which places it in the bottom 36% of more than 247 Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than two to one.
The industry's positioning in the bottom 50% of the Zacks Rank industries is a result of a negative earnings outlook for the constituent companies in aggregate. The industry's recent earnings estimate of $2.61 in June 2026 reflects a decline of 6.5% from June 2025, reflecting pessimism from the analysts.
Before we present a few Utility-Electric Power stocks that you may want to consider for your portfolio, let us take a look at the industry's recent stock-market performance and current valuation.
Electric Power Industry Beats the Sector But Lags the S&P 500
The Utility Electric Power industry has surpassed its sector but lagged the Zacks S&P 500 over the past 12 months. The industry has gained 17.3% compared with its sector's 13.5% rally. The Zacks S&P 500 composite has gained 23.7% in the same period.
Electric Power Industry's Current Valuation
The P/E F12M (Price/Earnings Forward 12 months) ratio is particularly useful for valuing electric power utilities, as their regulated operations produce reliable and consistent earnings. It provides a simple way to determine whether a stock is fairly valued compared with the industry peers.
The Utility Electric Power industry is trading at 15.47X compared with the S&P 500's 21.21X and the Utility sector's 15.34X.
Over the past five years, the industry has traded as high as 17.28X, as low as 11.99X and at the median of 14.9X.
4 Utility-Electric Power Stocks to Watch and Accumulate
Utilities is a mature sector and all the stocks selected from the Zacks Utility-Electric Power industry have a market capitalization of more than $30 billion. The stocks currently have a Zacks Rank #2 (Buy) each. You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here.
NextEra Energy: Juno Beach, FL-based NextEra Energy is engaged in the generation, transmission, distribution and sale of electric energy. The company has a well-chalked-out capital deployment plan, which will be directed toward modernizing and strengthening the existing infrastructure and generating more electricity from clean sources to lower carbon emissions. The company has plans to invest more than $94.1 billion through 2030 to strengthen its operations further.
NEE's long-term (three to five years) earnings growth is pegged at 9.12%. The current dividend yield for NEE is 2.8%, which is better than the Zacks S&P 500 composite's 1.34%. The Zacks Consensus Estimate for NextEra Energy's 2026 and 2027 earnings per share indicates growth of 8.09% and 8.70%, respectively.
Duke Energy: Charlotte, NC-based Duke Energy is a premier utility service provider offering efficient power and energy services. Duke Energy has been making strong progress in reducing carbon emissions from electricity generation. The company has plans to invest $103 billion in the 2026-2030 period. Investments in grid modernization, renewable energy and transmission infrastructure are expected to expand Duke Energy's operation and drive consistent earnings.
DUK's current dividend yield is 3.43%. The Zacks Consensus Estimate for Duke Energy's 2026 and 2027 earnings indicates year-over-year growth of 6.34% and 6.48%, respectively.
American Electric Power: Columbus, OH-based American Electric Power is a public utility holding company, which, through directly and indirectly owned subsidiaries, generates, transmits and distributes electricity, natural gas and other commodities. AEP is currently executing its investment plan of $78 billion over the 2026-2030 period in its electricity generation, transmission and distribution operations, including renewables.
AEP's long-term earnings growth is pegged at 8.6%. The current dividend yield for AEP is 2.87%. The Zacks Consensus Estimate for American Electric Power's 2026 and 2027 earnings per share indicates year-over-year growth of 6.37% and 7.95%, respectively.
Ameren Corp.: St. Louis, MO-based Ameren, a utility that generates and distributes electricity and natural gas to residential, commercial, industrial and wholesale end markets in Missouri and Illinois. It expects capital deployment in excess of $31.8 billion in different projects from 2026 to 2030. Ameren's growth has been led by its systematic and consistent investments in growth projects and infrastructural upgrades.
AEE's long-term earnings growth is pegged at 7.68%. The current dividend yield for AEE is 2.69%. The Zacks Consensus Estimate for AEE's 2026 and 2027 earnings per share implies year-over-year growth of 6.96% and 7.43%, respectively.
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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Ameren Corporation (AEE): Free Stock Analysis Report
NextEra Energy, Inc. (NEE): Free Stock Analysis Report
Duke Energy Corporation (DUK): Free Stock Analysis Report
American Electric Power Company, Inc. (AEP): Free Stock Analysis Report
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