American Electric Power (NYSE: AEP) and OGE Energy (NYSE:OGE) are both utilities companies, but which is the superior stock? We will contrast the two businesses based on the strength of their institutional ownership, earnings, profitability, risk, analyst recommendations, valuation and dividends.
Earnings & Valuation
This table compares American Electric Power and OGE Energy’s revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|American Electric Power||$15.40 billion||2.10||$1.91 billion||$3.83||17.20|
|OGE Energy||$2.26 billion||2.78||$619.00 million||$1.87||16.82|
American Electric Power pays an annual dividend of $2.48 per share and has a dividend yield of 3.8%. OGE Energy pays an annual dividend of $1.33 per share and has a dividend yield of 4.2%. American Electric Power pays out 64.8% of its earnings in the form of a dividend. OGE Energy pays out 71.1% 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. American Electric Power has raised its dividend for 5 consecutive years and OGE Energy has raised its dividend for 11 consecutive years. OGE Energy is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Risk and Volatility
American Electric Power has a beta of 0.22, suggesting that its stock price is 78% less volatile than the S&P 500. Comparatively, OGE Energy has a beta of 0.83, suggesting that its stock price is 17% less volatile than the S&P 500.
Insider & Institutional Ownership
71.7% of American Electric Power shares are owned by institutional investors. Comparatively, 63.0% of OGE Energy shares are owned by institutional investors. 0.2% of American Electric Power shares are owned by company insiders. Comparatively, 0.5% of OGE Energy shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.
This table compares American Electric Power and OGE Energy’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|American Electric Power||12.39%||10.05%||2.86%|
This is a summary of recent ratings and price targets for American Electric Power and OGE Energy, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|American Electric Power||0||5||9||0||2.64|
American Electric Power currently has a consensus price target of $74.23, indicating a potential upside of 12.69%. OGE Energy has a consensus price target of $36.50, indicating a potential upside of 16.06%. Given OGE Energy’s higher possible upside, analysts plainly believe OGE Energy is more favorable than American Electric Power.
OGE Energy beats American Electric Power on 9 of the 17 factors compared between the two stocks.
About American Electric Power
American Electric Power Company, Inc. (AEP) is a public utility holding company that owns, directly or indirectly, all of the outstanding common stock of its public utility subsidiaries and varying percentages of other subsidiaries. The service areas of the Company’s public utility subsidiaries cover the states of Arkansas, Indiana, Kentucky, Louisiana, Michigan, Ohio, Oklahoma, Tennessee, Texas, Virginia and West Virginia. The Company’s segments include Vertically Integrated Utilities, Transmission and Distribution Utilities, AEP Transmission Holdco, and Generation & Marketing. AEP’s vertically integrated utility operations are engaged in the generation, transmission and distribution of electricity for sale to retail and wholesale customers. Transmission and Distribution Utilities segment consists of the transmission and distribution of electricity for sale to retail and wholesale customers. AEP Transmission Holdco develops, constructs and operates transmission facilities.
About OGE Energy
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.
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