MGE Energy (NASDAQ: MGEE) and PG&E (NYSE:PCG) are both mid-cap utilities companies, but which is the better stock? We will contrast the two companies based on the strength of their earnings, institutional ownership, valuation, risk, dividends, profitability and analyst recommendations.
Volatility and Risk
MGE Energy has a beta of 0.33, suggesting that its share price is 67% less volatile than the S&P 500. Comparatively, PG&E has a beta of 0.14, suggesting that its share price is 86% less volatile than the S&P 500.
38.3% of MGE Energy shares are held by institutional investors. Comparatively, 81.1% of PG&E shares are held by institutional investors. 0.2% of MGE Energy shares are held by company insiders. Comparatively, 0.2% of PG&E shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.
This is a summary of recent ratings and recommmendations for MGE Energy and PG&E, as reported by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
PG&E has a consensus target price of $62.59, indicating a potential upside of 42.82%. Given PG&E’s stronger consensus rating and higher probable upside, analysts clearly believe PG&E is more favorable than MGE Energy.
This table compares MGE Energy and PG&E’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
MGE Energy pays an annual dividend of $1.29 per share and has a dividend yield of 2.2%. PG&E pays an annual dividend of $2.12 per share and has a dividend yield of 4.8%. MGE Energy pays out 58.6% of its earnings in the form of a dividend. PG&E pays out 48.7% 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. MGE Energy has increased its dividend for 2 consecutive years and PG&E has increased its dividend for 42 consecutive years. PG&E is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Earnings and Valuation
This table compares MGE Energy and PG&E’s revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|MGE Energy||$544.74 million||3.76||$75.56 million||$2.20||26.82|
|PG&E||$17.67 billion||1.28||$1.41 billion||$4.35||10.07|
PG&E has higher revenue and earnings than MGE Energy. PG&E is trading at a lower price-to-earnings ratio than MGE Energy, indicating that it is currently the more affordable of the two stocks.
PG&E beats MGE Energy on 11 of the 17 factors compared between the two stocks.
About MGE Energy
MGE Energy, Inc. (MGE) is a public utility holding company. The Company operates through five segments: Regulated electric utility operations; Regulated gas utility operations; Nonregulated energy operations; Transmission investments, and All other. The Regulated electric utility operations segment is engaged in generating, purchasing and distributing electricity through Madison Gas and Electric Company (MGE). The Regulated gas utility operations segment is engaged in purchasing and distributing natural gas through MGE. The Nonregulated energy operations segment is engaged in owning and leasing electric generating capacity that assists MGE through MGE Energy’s subsidiaries MGE Power Elm Road, LLC and MGE Power West Campus, LLC. The Transmission investments segment represents its investment in American Transmission Company LLC and ATC Holdco, LLC. The All other segment is engaged in investing and financing in companies and property that relate to the regulated operations.
PG&E Corporation is a holding company. The Company’s primary operating subsidiary is Pacific Gas and Electric Company (the Utility), which operates in northern and central California. The Utility is engaged in the sale and delivery of electricity and natural gas to customers. The Utility generates electricity and provides electricity transmission and distribution services throughout its service territory in northern and central California to residential, commercial, industrial, and agricultural customers. The Utility provides bundled services (electricity, transmission and distribution services) to various customers in its service territory. As of December 31, 2016, the Utility owned approximately 18,400 circuit miles of interconnected transmission lines operating at voltages ranging from 60 kilovolt to 500 kilovolt. As of December 31, 2016, the Utility also operated 92 electric transmission substations with a capacity of approximately 64,600 megavolt ampere (MVA).
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