Critical Contrast: OGE Energy (NYSE:OGE) vs. Atlantica Yield (AY)

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OGE Energy (NASDAQ: AY) and Atlantica Yield (NASDAQ:AY) are both mid-cap utilities companies, but which is the superior stock? We will contrast the two businesses based on the strength of their analyst recommendations, institutional ownership, earnings, valuation, profitability, risk and dividends.

Analyst Ratings

This is a summary of current ratings and price targets for OGE Energy and Atlantica Yield, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
OGE Energy 0 4 2 0 2.33
Atlantica Yield 0 0 4 0 3.00

OGE Energy currently has a consensus target price of $37.00, indicating a potential downside of 1.04%. Atlantica Yield has a consensus target price of $25.75, indicating a potential upside of 22.42%. Given Atlantica Yield’s stronger consensus rating and higher probable upside, analysts plainly believe Atlantica Yield is more favorable than OGE Energy.

Profitability

This table compares OGE Energy and Atlantica Yield’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
OGE Energy 28.26% 10.74% 3.90%
Atlantica Yield -5.50% 1.95% 0.36%

Risk and Volatility

OGE Energy has a beta of 0.63, meaning that its share price is 37% less volatile than the S&P 500. Comparatively, Atlantica Yield has a beta of 0.97, meaning that its share price is 3% less volatile than the S&P 500.

Insider and Institutional Ownership

61.5% of OGE Energy shares are owned by institutional investors. Comparatively, 49.5% of Atlantica Yield shares are owned by institutional investors. 0.4% of OGE Energy shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Valuation & Earnings

This table compares OGE Energy and Atlantica Yield’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
OGE Energy $2.26 billion 3.30 $619.00 million $1.92 19.47
Atlantica Yield $1.01 billion 2.09 -$111.80 million ($0.18) -116.86

OGE Energy has higher revenue and earnings than Atlantica Yield. Atlantica Yield is trading at a lower price-to-earnings ratio than OGE Energy, indicating that it is currently the more affordable of the two stocks.

Dividends

OGE Energy pays an annual dividend of $1.33 per share and has a dividend yield of 3.6%. Atlantica Yield pays an annual dividend of $1.36 per share and has a dividend yield of 6.5%. OGE Energy pays out 69.3% of its earnings in the form of a dividend. Atlantica Yield pays out -755.6% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. OGE Energy has increased its dividend for 11 consecutive years. Atlantica Yield is clearly the better dividend stock, given its higher yield and lower payout ratio.

Summary

OGE Energy beats Atlantica Yield on 10 of the 17 factors compared between the two stocks.

OGE Energy Company Profile

OGE Energy Corp., together with its subsidiaries, operates as an energy and energy services provider that offers physical delivery and related services for electricity and natural gas primarily in the south central United States. The company operates in two segments, Electric Utility and Natural Gas Midstream Operations. The Electric Utility segment generates, transmits, distributes, and sells electric energy in Oklahoma and western Arkansas. This segment furnishes retail electric service in 267 communities and their contiguous rural and suburban areas; and owns and operates coal-fired, natural gas-fired, wind-powered, and solar-powered generating facilities. The Natural Gas Midstream Operations segment is involved in gathering, processing, transporting, and storing natural gas; and the provision of crude oil gathering services, and interstate and intrastate natural gas pipeline transportation and storage services to natural gas producers, industrial end users, and natural gas marketers. As of December 31, 2017, the company owned and operated interconnected electric generation, transmission, and distribution system, including 10 generating stations with an aggregate capability of 6,304 megawatts; and a transmission system comprising 52 substations and 4,949 structure miles of lines in Oklahoma, and 7 substations and 277 structure miles of lines in Arkansas. Its distribution system consisted of 346 substations, 29,317 structure miles of overhead lines, 2,824 miles of underground conduit, and 10,875 miles of underground conductors in Oklahoma, as well as 30 substations, 2,785 structure miles of overhead lines, 282 miles of underground conduit, and 689 miles of underground conductors in Arkansas. OGE Energy Corp. was founded in 1995 and is headquartered in Oklahoma City, Oklahoma.

Atlantica Yield Company Profile

Atlantica Yield plc acquires, owns, and manages renewable energy natural gas, power, electric transmission lines, and water assets in North America, South America, Spain, Algeria, and South Africa. As of December 31, 2017, it had 22 assets, including 1,446 megawatts (MW) of renewable energy generation assets comprising solar power and wind plants; 300 MW of natural gas power generation assets that produce electricity and steam from natural gas; 1,099 miles of electric transmission lines; and desalination plants with an aggregate capacity of 10.5 million cubic feet per day. The company was formerly known as Abengoa Yield plc and changed its name to Atlantica Yield plc in May 2016. Atlantica Yield plc was incorporated in 2013 and is based in Brentford, the United Kingdom.

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