Financial Analysis: OGE Energy Corporation (OGE) and ITC Holdings Corp. (ITC)
OGE Energy Corporation (NYSE: OGE) and ITC Holdings Corp. (NYSE:ITC) are both utilities companies, but which is the better business? We will compare the two businesses based on the strength of their dividends, valuation, analyst recommendations, institutional ownership, profitability, risk and earnings.
OGE Energy Corporation pays an annual dividend of $1.33 per share and has a dividend yield of 3.6%. ITC Holdings Corp. pays an annual dividend of $0.86 per share and has a dividend yield of 1.9%. OGE Energy Corporation pays out 69.6% of its earnings in the form of a dividend. ITC Holdings Corp. pays out 55.8% 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 5 consecutive years and ITC Holdings Corp. has raised its dividend for 10 consecutive years.
Institutional and Insider Ownership
62.5% of OGE Energy Corporation shares are held by institutional investors. Comparatively, 84.2% of ITC Holdings Corp. shares are held by institutional investors. 0.5% of OGE Energy Corporation shares are held by insiders. Comparatively, 3.2% of ITC Holdings Corp. shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.
This is a summary of recent ratings and target prices for OGE Energy Corporation and ITC Holdings Corp., as reported by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|OGE Energy Corporation||0||5||2||0||2.29|
|ITC Holdings Corp.||0||0||0||0||N/A|
OGE Energy Corporation currently has a consensus price target of $36.00, indicating a potential downside of 2.49%. Given OGE Energy Corporation’s higher possible upside, analysts plainly believe OGE Energy Corporation is more favorable than ITC Holdings Corp..
Valuation & Earnings
This table compares OGE Energy Corporation and ITC Holdings Corp.’s revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|OGE Energy Corporation||$2.32 billion||3.18||$811.70 million||$1.91||19.33|
|ITC Holdings Corp.||N/A||N/A||N/A||$1.54||29.55|
OGE Energy Corporation has higher revenue and earnings than ITC Holdings Corp.. OGE Energy Corporation is trading at a lower price-to-earnings ratio than ITC Holdings Corp., indicating that it is currently the more affordable of the two stocks.
This table compares OGE Energy Corporation and ITC Holdings Corp.’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|OGE Energy Corporation||16.50%||11.06%||3.80%|
|ITC Holdings Corp.||26.73%||16.53%||3.82%|
ITC Holdings Corp. beats OGE Energy Corporation on 7 of the 12 factors compared between the two stocks.
OGE Energy Corporation 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.
ITC Holdings Corp. Company Profile
ITC Holdings Corp. (ITC Holdings) is a holding company. The Company is engaged in owning, operating, maintaining and investing in transmission infrastructure. The Company’s business consists primarily of the electric transmission operations of its Regulated Operating Subsidiaries. Its Regulated Operating Subsidiaries include International Transmission Company (ITCTransmission), Michigan Electric Transmission Company, LLC (METC), ITC Midwest LLC (ITC Midwest). The operations performed by its Regulated Operating Subsidiaries fall into the various categories, such as asset planning; engineering, design and construction; maintenance, and real time operations. Its customers include investor-owned utilities, municipalities, cooperatives, power marketers and alternative energy suppliers. It owns and operates high-voltage systems in Michigan’s Lower Peninsula and portions of Iowa, Minnesota, Illinois, Missouri, Kansas and Oklahoma.
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