Financial Survey: OGE Energy Corporation (OGE) & NorthWestern Corporation (NWE)
OGE Energy Corporation (NYSE: OGE) and NorthWestern Corporation (NYSE:NWE) are both mid-cap utilities companies, but which is the better investment? We will contrast the two companies based on the strength of their analyst recommendations, institutional ownership, earnings, dividends, profitabiliy, valuation and risk.
Institutional and Insider Ownership
61.9% of OGE Energy Corporation shares are held by institutional investors. Comparatively, 94.6% of NorthWestern Corporation shares are held by institutional investors. 0.5% of OGE Energy Corporation shares are held by insiders. Comparatively, 1.3% of NorthWestern Corporation shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.
This is a summary of current ratings and price targets for OGE Energy Corporation and NorthWestern Corporation, as reported by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|OGE Energy Corporation||0||3||2||0||2.40|
OGE Energy Corporation currently has a consensus price target of $35.20, indicating a potential downside of 1.98%. NorthWestern Corporation has a consensus price target of $57.33, indicating a potential downside of 4.89%. Given OGE Energy Corporation’s stronger consensus rating and higher possible upside, analysts clearly believe OGE Energy Corporation is more favorable than NorthWestern Corporation.
Earnings and Valuation
This table compares OGE Energy Corporation and NorthWestern Corporation’s gross revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|OGE Energy Corporation||$2.28 billion||3.15||$799.50 million||$1.91||18.80|
|NorthWestern Corporation||$1.28 billion||2.28||$411.62 million||$3.48||17.32|
OGE Energy Corporation has higher revenue and earnings than NorthWestern Corporation. NorthWestern Corporation is trading at a lower price-to-earnings ratio than OGE Energy Corporation, indicating that it is currently the more affordable of the two stocks.
This table compares OGE Energy Corporation and NorthWestern Corporation’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|OGE Energy Corporation||16.50%||11.10%||3.84%|
OGE Energy Corporation pays an annual dividend of $1.21 per share and has a dividend yield of 3.4%. NorthWestern Corporation pays an annual dividend of $2.10 per share and has a dividend yield of 3.5%. OGE Energy Corporation pays out 63.4% of its earnings in the form of a dividend. NorthWestern Corporation pays out 60.3% 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 Corporation has raised its dividend for 8 consecutive years and NorthWestern Corporation has raised its dividend for 10 consecutive years. NorthWestern Corporation is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Risk & Volatility
OGE Energy Corporation has a beta of 0.88, suggesting that its share price is 12% less volatile than the S&P 500. Comparatively, NorthWestern Corporation has a beta of 0.36, suggesting that its share price is 64% less volatile than the S&P 500.
OGE Energy Corporation beats NorthWestern Corporation on 11 of the 17 factors compared between the two stocks.
About OGE Energy Corporation
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.
About NorthWestern Corporation
NorthWestern Corporation, doing business as North-Western Energy, provides electricity and natural gas. The Company’s segments are Electric operations, Natural gas operations and All other. As of December 31, 2016, the Company provided electricity and natural gas to approximately 709,600 customers in Montana, South Dakota and Nebraska. It generates and distributes electricity in South Dakota; distributes natural gas in South Dakota and Nebraska, and generates and distributes electricity and distributes natural gas in Montana. Its regulated electric utility business in Montana includes generation, transmission and distribution. As of December 31, 2016, it provided retail electricity in 110 communities in South Dakota. Its regulated natural gas utility business in Montana includes production, storage, transmission and distribution. As of December 31, 2016, it provided natural gas to approximately 88,500 customers in 60 South Dakota communities and four Nebraska communities.
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