NEW YORK (TheStreet) -- The utilities sector was one of the few sectors that not only outperformed the broader markets in the third quarter but had a positive return, as investors fled to safety during the market turbulence. 

The S&P 500 Utilities Index rose 4.4% for the three-month period, ending Sept. 30, while the broader S&P 500 fell 6.9% -- its worst quarterly performance in four years -- as a result of the quarter's choppy markets.

That said, the sector had some clear losers. Here are the 10 worst-performing utilities stocks in the third quarter, paired with TheStreet Ratings to let you know if you should buy or sell these stocks in the final quarter of the 2015.

TheStreet Ratings uses a quantitative approach to rating over 4,300 stocks to predict return potential for the next year. The model is both objective, using elements such as volatility of past operating revenues, financial strength, and company cash flows, and subjective, including expected equities market returns, future interest rates, implied industry outlook and forecasted company earnings.

Buying an S&P 500 stock that TheStreet Ratings rated a "buy" yielded a 16.56% return in 2014 beating the S&P 500 Total Return Index by 304 basis points. Buying a Russell 2000 stock that TheStreet Ratings rated a "buy" yielded a 9.5% return in 2014, beating the Russell 2000 index, including dividends reinvested, by 460 basis points last year.

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10. Duke Energy (DUK - Get Report)
Industry: Utilities Non-Telecom/Electric Utilities
Market Cap: $48.2 billion
Year-to-date return: 1.9%

TheStreet Said: TheStreet Ratings team rates DUKE ENERGY CORP as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

We rate DUKE ENERGY CORP (DUK) a BUY. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its good cash flow from operations and expanding profit margins. We feel its strengths outweigh the fact that the company has had sub par growth in net income.

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Net operating cash flow has increased to $1,439.00 million or 15.48% when compared to the same quarter last year. Despite an increase in cash flow, DUKE ENERGY CORP's average is still marginally south of the industry average growth rate of 22.16%.
  • 36.82% is the gross profit margin for DUKE ENERGY CORP which we consider to be strong. Regardless of DUK's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 9.71% trails the industry average.
  • DUKE ENERGY CORP's earnings per share declined by 14.7% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past year. However, we anticipate this trend reversing over the coming year. During the past fiscal year, DUKE ENERGY CORP reported lower earnings of $3.46 versus $3.63 in the prior year. This year, the market expects an improvement in earnings ($4.65 versus $3.46).
  • DUK, with its decline in revenue, slightly underperformed the industry average of 0.8%. Since the same quarter one year prior, revenues slightly dropped by 2.1%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • Even though the current debt-to-equity ratio is 1.04, it is still below the industry average, suggesting that this level of debt is acceptable within the Electric Utilities industry. Even though the debt-to-equity ratio shows mixed results, the company's quick ratio of 0.29 is very low and demonstrates very weak liquidity.
  • You can view the full analysis from the report here: DUK


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9. NextEra Energy Inc. (NEE - Get Report)
Industry: Utilities Non-Telecom/Electric Utilities
Market Cap: $44.3 billion
Year-to-date return: -2.2%

TheStreet Said: TheStreet Ratings team rates NEXTERA ENERGY INC as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

We rate NEXTERA ENERGY INC (NEE) a BUY. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, impressive record of earnings per share growth, compelling growth in net income, expanding profit margins and good cash flow from operations. We feel its strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated.

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • NEE's revenue growth has slightly outpaced the industry average of 0.8%. Since the same quarter one year prior, revenues slightly increased by 8.2%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • NEXTERA ENERGY INC has improved earnings per share by 42.0% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, NEXTERA ENERGY INC increased its bottom line by earning $5.60 versus $3.93 in the prior year. This year, the market expects an improvement in earnings ($5.65 versus $5.60).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Electric Utilities industry. The net income increased by 45.8% when compared to the same quarter one year prior, rising from $491.00 million to $716.00 million.
  • 43.43% is the gross profit margin for NEXTERA ENERGY INC which we consider to be strong. It has increased from the same quarter the previous year. Along with this, the net profit margin of 16.42% is above that of the industry average.
  • Net operating cash flow has increased to $1,753.00 million or 22.50% when compared to the same quarter last year. In addition, NEXTERA ENERGY INC has also modestly surpassed the industry average cash flow growth rate of 22.16%.
  • You can view the full analysis from the report here: NEE

 

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8. Sempra Energy (SRE - Get Report)
Industry: Utilities Non-Telecom/Multi-Utilities
Market Cap: $23.7 billion
Year-to-date return: -2.2%

TheStreet Said: TheStreet Ratings team rates SEMPRA ENERGY as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:

We rate SEMPRA ENERGY (SRE) a BUY. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its growth in earnings per share, increase in net income, good cash flow from operations, notable return on equity and reasonable valuation levels. We feel its strengths outweigh the fact that the company has had lackluster performance in the stock itself.

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • SEMPRA ENERGY has improved earnings per share by 8.3% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, SEMPRA ENERGY increased its bottom line by earning $4.64 versus $4.02 in the prior year. This year, the market expects an improvement in earnings ($4.85 versus $4.64).
  • The company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the Multi-Utilities industry average. The net income increased by 9.6% when compared to the same quarter one year prior, going from $270.00 million to $296.00 million.
  • Net operating cash flow has significantly increased by 213.84% to $408.00 million when compared to the same quarter last year. In addition, SEMPRA ENERGY has also vastly surpassed the industry average cash flow growth rate of 41.60%.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Multi-Utilities industry and the overall market on the basis of return on equity, SEMPRA ENERGY has outperformed in comparison with the industry average, but has underperformed when compared to that of the S&P 500.
  • You can view the full analysis from the report here: SRE

 

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7. FirstEnergy Corp. (FE - Get Report)
Industry: Utilities Non-Telecom/Electric Utilities
Market Cap: $12.8 billion
Year-to-date return: -3.8%

TheStreet Said: TheStreet Ratings team rates FIRSTENERGY CORP as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:

We rate FIRSTENERGY CORP (FE) a HOLD. The primary factors that have impacted our rating are mixed ? some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its increase in net income, growth in earnings per share and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, generally higher debt management risk and disappointing return on equity.

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Electric Utilities industry. The net income increased by 192.2% when compared to the same quarter one year prior, rising from $64.00 million to $187.00 million.
  • FIRSTENERGY CORP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, FIRSTENERGY CORP reported lower earnings of $0.50 versus $0.90 in the prior year. This year, the market expects an improvement in earnings ($2.65 versus $0.50).
  • Currently the debt-to-equity ratio of 1.82 is quite high overall and when compared to the industry average, suggesting that the current management of debt levels should be re-evaluated. Along with this, the company manages to maintain a quick ratio of 0.27, which clearly demonstrates the inability to cover short-term cash needs.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Electric Utilities industry and the overall market on the basis of return on equity, FIRSTENERGY CORP underperformed against that of the industry average and is significantly less than that of the S&P 500.
  • You can view the full analysis from the report here: FE

 

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6. CenterPoint Energy Inc. (CNP - Get Report)
Industry: Utilities Non-Telecom/Multi-Utilities
Market Cap: $7.6 billion
Year-to-date return: -5.2%

TheStreet Said: TheStreet Ratings team rates CENTERPOINT ENERGY INC as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:

We rate CENTERPOINT ENERGY INC (CNP) a HOLD. The primary factors that have impacted our rating are mixed ? some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its reasonable valuation levels and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, generally higher debt management risk and disappointing return on equity.

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Net operating cash flow has increased to $456.00 million or 37.34% when compared to the same quarter last year. Despite an increase in cash flow, CENTERPOINT ENERGY INC's average is still marginally south of the industry average growth rate of 41.60%.
  • CNP, with its decline in revenue, underperformed when compared the industry average of 7.5%. Since the same quarter one year prior, revenues fell by 18.7%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
  • The company, on the basis of change in net income from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and greatly underperformed compared to the Multi-Utilities industry average. The net income has significantly decreased by 28.0% when compared to the same quarter one year ago, falling from $107.00 million to $77.00 million.
  • Currently the debt-to-equity ratio of 1.88 is quite high overall and when compared to the industry average, suggesting that the current management of debt levels should be re-evaluated. To add to this, CNP has a quick ratio of 0.59, this demonstrates the lack of ability of the company to cover short-term liquidity needs.
  • You can view the full analysis from the report here: CNP

 

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5. Exelon Corp. (EXC - Get Report)
Industry: Utilities Non-Telecom/Multi-Utilities
Market Cap: $25 billion
Year-to-date return: -5.5%

TheStreet Said: TheStreet Ratings team rates EXELON CORP as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

We rate EXELON CORP (EXC) a BUY. This is driven by multiple strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, compelling growth in net income, attractive valuation levels, good cash flow from operations and impressive record of earnings per share growth. We feel its strengths outweigh the fact that the company has had lackluster performance in the stock itself.

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • EXC's revenue growth has slightly outpaced the industry average of 0.8%. Since the same quarter one year prior, revenues slightly increased by 8.2%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The company, on the basis of net income growth from the same quarter one year ago, has significantly outperformed against the S&P 500 and exceeded that of the Electric Utilities industry average. The net income increased by 22.2% when compared to the same quarter one year prior, going from $522.00 million to $638.00 million.
  • Net operating cash flow has significantly increased by 56.30% to $2,479.00 million when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 22.16%.
  • EXELON CORP has improved earnings per share by 23.3% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, EXELON CORP reported lower earnings of $1.87 versus $2.00 in the prior year. This year, the market expects an improvement in earnings ($2.47 versus $1.87).
  • You can view the full analysis from the report here: EXC

 

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4. Entergy Corp. (ETR - Get Report)
Industry: Utilities Non-Telecom/Electric Utilities
Market Cap: $11.5 billion
Year-to-date return: -7.7%

TheStreet Said: TheStreet Ratings team rates ENTERGY CORP as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:

We rate ENTERGY CORP (ETR) a HOLD. The primary factors that have impacted our rating are mixed ? some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strongest point has been its expanding profit margins. At the same time, however, we also find weaknesses including deteriorating net income, generally higher debt management risk and disappointing return on equity.

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • ENTERGY CORP's earnings per share declined by 20.9% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, ENTERGY CORP increased its bottom line by earning $5.22 versus $3.98 in the prior year. This year, the market expects an improvement in earnings ($5.38 versus $5.22).
  • ETR, with its decline in revenue, underperformed when compared the industry average of 0.8%. Since the same quarter one year prior, revenues slightly dropped by 9.4%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • The gross profit margin for ENTERGY CORP is currently lower than what is desirable, coming in at 29.05%. Regardless of ETR's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 5.66% trails the industry average.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. When compared to other companies in the Electric Utilities industry and the overall market, ENTERGY CORP's return on equity is below that of both the industry average and the S&P 500.
  • The company, on the basis of change in net income from the same quarter one year ago, has underperformed when compared to that of the S&P 500 and greatly underperformed compared to the Electric Utilities industry average. The net income has decreased by 20.9% when compared to the same quarter one year ago, dropping from $194.28 million to $153.72 million.
  • You can view the full analysis from the report here: ETR

 

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3. Pepco Holdings Inc. (POM)
Industry: Utilities Non-Telecom/Electric Utilities
Market Cap: $6.1 billion
Year-to-date return: -10.1%

TheStreet Said: TheStreet Ratings team rates PEPCO HOLDINGS INC as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

We rate PEPCO HOLDINGS INC (POM) a BUY. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth and good cash flow from operations. We feel its strengths outweigh the fact that the company has had lackluster performance in the stock itself.

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • POM's revenue growth has slightly outpaced the industry average of 0.8%. Since the same quarter one year prior, revenues slightly increased by 2.0%. This growth in revenue does not appear to have trickled down to the company's bottom line, displaying stagnant earnings per share.
  • Net operating cash flow has increased to $182.00 million or 34.81% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of 22.16%.
  • PEPCO HOLDINGS INC reported flat earnings per share in the most recent quarter. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, PEPCO HOLDINGS INC increased its bottom line by earning $0.96 versus $0.41 in the prior year. This year, the market expects an improvement in earnings ($1.20 versus $0.96).
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500, but is less than that of the Electric Utilities industry average. The net income has remained constant at $53.00 million when compared to the same quarter one year ago.
  • POM has underperformed the S&P 500 Index, declining 13.31% from its price level of one year ago. Despite the decline in its share price over the last year, this stock is still more expensive (when compared to its current earnings) than most other companies in its industry. We feel, however, that other strengths this company displays compensate for this.
  • You can view the full analysis from the report here: POM

 

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2. AES Corp. (AES - Get Report)
Industry: Utilities Non-Telecom/Independent Power Producers & Energy Traders
Market Cap: $6.7 billion
Year-to-date return: -26.1%

TheStreet Said: No rating available

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1. NRG Energy Inc. (NRG - Get Report)
Industry: Utilities Non-Telecom/Independent Power Producers & Energy Traders
Market Cap: $4.9 billion
Year-to-date return: -35.1%

TheStreet Said: TheStreet Ratings team rates NRG ENERGY INC as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:

We rate NRG ENERGY INC (NRG) a HOLD. The primary factors that have impacted our rating are mixed ? some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, compelling growth in net income and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, generally higher debt management risk and poor profit margins.

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • NRG ENERGY INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, NRG ENERGY INC turned its bottom line around by earning $0.21 versus -$1.22 in the prior year. This year, the market expects an improvement in earnings ($0.65 versus $0.21).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Independent Power Producers & Energy Traders industry. The net income increased by 85.6% when compared to the same quarter one year prior, rising from -$97.00 million to -$14.00 million.
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 11.9%. Since the same quarter one year prior, revenues slightly dropped by 6.2%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
  • NRG's stock share price has done very poorly compared to where it was a year ago: Despite any rallies, the net result is that it is down by 48.53%, which is also worse that the performance of the S&P 500 Index. Investors have so far failed to pay much attention to the earnings improvements the company has managed to achieve over the last quarter. Despite the heavy decline in its share price, this stock is still more expensive (when compared to its current earnings) than most other companies in its industry.
  • The debt-to-equity ratio is very high at 2.10 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with the unfavorable debt-to-equity ratio, NRG maintains a poor quick ratio of 0.90, which illustrates the inability to avoid short-term cash problems.
  • You can view the full analysis from the report here: NRG