Financial Comparison: Algonquin Power & Utilities (NYSE:AQN) vs. MGE Energy (NASDAQ:MGEE)

Algonquin Power & Utilities (NYSE:AQN) and MGE Energy (NASDAQ:MGEE) are both mid-cap utilities companies, but which is the superior business? We will contrast the two companies based on the strength of their risk, earnings, profitability, analyst recommendations, institutional ownership, valuation and dividends.

Institutional & Insider Ownership

62.3% of Algonquin Power & Utilities shares are held by institutional investors. Comparatively, 52.6% of MGE Energy shares are held by institutional investors. 0.1% of Algonquin Power & Utilities shares are held by insiders. Comparatively, 0.2% of MGE Energy shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Dividends

Algonquin Power & Utilities pays an annual dividend of $0.26 per share and has a dividend yield of 4.0%. MGE Energy pays an annual dividend of $1.90 per share and has a dividend yield of 2.4%. Algonquin Power & Utilities pays out -650.0% of its earnings in the form of a dividend. MGE Energy pays out 51.5% 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. MGE Energy has increased its dividend for 49 consecutive years. Algonquin Power & Utilities is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Ratings

This is a summary of recent ratings and price targets for Algonquin Power & Utilities and MGE Energy, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Algonquin Power & Utilities	1	5	5	2	2.62
MGE Energy	1	2	0	0	1.67

Algonquin Power & Utilities presently has a consensus target price of $6.70, suggesting a potential upside of 3.49%. MGE Energy has a consensus target price of $79.00, suggesting a potential upside of 0.08%. Given Algonquin Power & Utilities’ stronger consensus rating and higher possible upside, analysts clearly believe Algonquin Power & Utilities is more favorable than MGE Energy.

Earnings and Valuation

This table compares Algonquin Power & Utilities and MGE Energy”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Algonquin Power & Utilities	$2.32 billion	2.14	-$1.38 billion	($0.04)	-161.85
MGE Energy	$676.94 million	4.26	$120.57 million	$3.69	21.39

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

Profitability

This table compares Algonquin Power & Utilities and MGE Energy’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Algonquin Power & Utilities	-1.11%	5.14%	1.84%
MGE Energy	18.55%	10.65%	4.67%

Risk and Volatility

Algonquin Power & Utilities has a beta of 0.75, meaning that its stock price is 25% less volatile than the S&P 500. Comparatively, MGE Energy has a beta of 0.83, meaning that its stock price is 17% less volatile than the S&P 500.

Summary

MGE Energy beats Algonquin Power & Utilities on 10 of the 18 factors compared between the two stocks.

About Algonquin Power & Utilities

Algonquin Power & Utilities Corp. is an investment holding company, which engages in energy generation and water distribution facilities. It operates through the Regulated Services Group and Renewable Energy Group segments. The Regulated Services Group segment owns and operates a portfolio of electric, natural gas, water distribution, and wastewater collection utility systems and transmission. The Renewable Energy Group segment focuses on operating a diversified portfolio of renewable and thermal electric generation assets. The company was founded on August 1, 1988 and is headquartered in Oakville, Canada.

About MGE Energy

MGE Energy, Inc., through its subsidiaries, operates as a public utility holding company primarily in the United States. It operates through Regulated Electric Utility Operations; Regulated Gas Utility Operations; Nonregulated Energy Operations; Transmission Investments; and All Other segments. The company generates, purchases, and distributes electricity and natural gas in Wisconsin and Iowa; owns and leases electric generating capacity; and plans, constructs, operates, maintains, and expands transmission facilities to provide transmission power services. It generates electricity from coal-fired, gas-fired, and renewable energy sources. As of December 31, 2023, the company owned and operated 835 miles of overhead electric distribution lines; 1,330 miles of underground electric distribution cables; 49 substations with an installed capacity of 1.2 million kVA; and gas facilities, including 3,066 miles of distribution mains, as well as supplied electric service to approximately 163,000 customers. MGE Energy, Inc. founded in 2001 and is headquartered in Madison, Wisconsin.