Comparing Xcel Energy (XEL) & MGE Energy (MGEE)

Xcel Energy (NYSE: XEL) and MGE Energy (NASDAQ:MGEE) are both mid-cap electric utilities – nec companies, but which is the superior stock? We will contrast the two businesses based on the strength of their dividends, valuation, risk, profitability, analyst recommendations, earnings and institutional ownership.

Dividends

Xcel Energy pays an annual dividend of $1.44 per share and has a dividend yield of 3.2%. MGE Energy pays an annual dividend of $1.29 per share and has a dividend yield of 2.2%. Xcel Energy pays out 61.8% of its earnings in the form of a dividend. MGE Energy pays out 58.9% 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. Xcel Energy has increased its dividend for 14 consecutive years and MGE Energy has increased its dividend for 42 consecutive years.

Insider and Institutional Ownership

73.3% of Xcel Energy shares are owned by institutional investors. Comparatively, 38.3% of MGE Energy shares are owned by institutional investors. 0.2% of Xcel Energy shares are owned by company insiders. Comparatively, 0.2% of MGE Energy shares are owned by company 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.

Earnings and Valuation

This table compares Xcel Energy and MGE Energy’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Xcel Energy $11.11 billion 2.06 $1.12 billion $2.33 19.37
MGE Energy $544.74 million 3.79 $75.56 million $2.19 27.19

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

Risk and Volatility

Xcel Energy has a beta of 0.21, meaning that its share price is 79% less volatile than the S&P 500. Comparatively, MGE Energy has a beta of 0.32, meaning that its share price is 68% less volatile than the S&P 500.

Profitability

This table compares Xcel Energy and MGE Energy’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Xcel Energy 10.40% 10.63% 2.85%
MGE Energy 13.52% 10.31% 4.23%

Analyst Recommendations

This is a summary of recent recommendations for Xcel Energy and MGE Energy, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Xcel Energy 0 8 3 0 2.27
MGE Energy 0 1 0 0 2.00

Xcel Energy presently has a consensus price target of $48.91, suggesting a potential upside of 8.37%. Given Xcel Energy’s stronger consensus rating and higher probable upside, equities analysts plainly believe Xcel Energy is more favorable than MGE Energy.

Summary

Xcel Energy beats MGE Energy on 10 of the 17 factors compared between the two stocks.

About Xcel Energy

Xcel Energy Inc. is a public utility holding company. The Company’s operations include the activity of four utility subsidiaries that serve electric and natural gas customers in eight states. The Company’s segments include regulated electric utility, regulated natural gas utility and all other. The Company’s utility subsidiaries include NSP-Minnesota, NSP-Wisconsin, Public Service Company of Colorado (PSCo) and Southwestern Public Service Co. (SPS), which serve customers in portions of Colorado, Michigan, Minnesota, New Mexico, North Dakota, South Dakota, Texas and Wisconsin. Along with WYCO Development LLC (WYCO), a joint venture formed with Colorado Interstate Gas Company, LLC (CIG) to develop and lease natural gas pipelines storage and compression facilities, and WestGas InterState, Inc. (WGI), an interstate natural gas pipeline company, these companies comprise the regulated utility operations.

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.

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