OGE Energy (NYSE: OGE) and AES (NYSE:AES) are both mid-cap utilities companies, but which is the better investment? We will contrast the two businesses based on the strength of their institutional ownership, profitability, earnings, valuation, risk, dividends and analyst recommendations.
Valuation & Earnings
This table compares OGE Energy and AES’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||2.81||$619.00 million||$3.10||10.26|
|AES||$10.53 billion||0.68||-$1.16 billion||($1.76)||-6.16|
Institutional & Insider Ownership
63.0% of OGE Energy shares are owned by institutional investors. Comparatively, 93.4% of AES shares are owned by institutional investors. 0.5% of OGE Energy shares are owned by company insiders. Comparatively, 1.2% of AES shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.
OGE Energy pays an annual dividend of $1.33 per share and has a dividend yield of 4.2%. AES pays an annual dividend of $0.52 per share and has a dividend yield of 4.8%. OGE Energy pays out 42.9% of its earnings in the form of a dividend. AES pays out -29.5% 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 raised its dividend for 11 consecutive years and AES has raised its dividend for 5 consecutive years. AES is clearly the better dividend stock, given its higher yield and lower payout ratio.
This table compares OGE Energy and AES’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
This is a breakdown of recent ratings and recommmendations for OGE Energy and AES, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
OGE Energy presently has a consensus target price of $36.50, indicating a potential upside of 14.74%. AES has a consensus target price of $12.70, indicating a potential upside of 17.16%. Given AES’s stronger consensus rating and higher possible upside, analysts plainly believe AES is more favorable than OGE Energy.
Risk & Volatility
OGE Energy has a beta of 0.83, indicating that its stock price is 17% less volatile than the S&P 500. Comparatively, AES has a beta of 1.26, indicating that its stock price is 26% more volatile than the S&P 500.
AES beats OGE Energy on 9 of the 17 factors compared between the two stocks.
OGE Energy Company Profile
OGE Energy Corp. (OGE Energy) is an energy and energy services provider offering physical delivery and related services for both electricity and natural gas primarily in the south central United States. The Company operates through 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. Its operations are conducted through Oklahoma Gas and Electric Company (OG&E). OG&E is an electric utility in Oklahoma and its franchised service territory includes Fort Smith, Arkansas and the surrounding communities. The natural gas midstream operations segment represents the Company’s investment in Enable Midstream Partners, LP (Enable) through subsidiaries, and ultimately OGE Enogex Holdings LLC (OGE Holdings). Enable’s assets and operations are organized into two segments: gathering and processing, and transportation and storage.
AES Company Profile
The AES Corporation is a holding company. The Company, through its subsidiaries and affiliates, operates a diversified portfolio of electricity generation and distribution businesses. It is organized into six strategic business units (SBUs): the United States; Andes; Brazil; Mexico, Central America and the Caribbean (MCAC); Europe, and Asia. As of December 31, 2016, its United States SBU had 18 generation facilities and two integrated utilities in the United States. As of December 31, 2016, its Andes SBU had generation facilities in three countries. Its Brazil SBU has generation and distribution businesses, Eletropaulo and Tiete. As of December 31, 2016, its MCAC SBU had a portfolio of distribution businesses and generation facilities, including renewable energy, in five countries. As of December 31, 2016, its Europe SBU had generation facilities in five countries. As of December 31, 2016, its Asia SBU had generation facilities in three countries.
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