American Electric Power (NASDAQ:AEP – Get Free Report) and MGE Energy (NASDAQ:MGEE – Get Free Report) are both utilities 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.
Profitability
This table compares American Electric Power and MGE Energy’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| American Electric Power | 16.29% | 10.21% | 2.89% |
| MGE Energy | 18.61% | 10.94% | 4.68% |
Analyst Recommendations
This is a summary of recent recommendations for American Electric Power and MGE Energy, as reported by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| American Electric Power | 0 | 9 | 13 | 0 | 2.59 |
| MGE Energy | 1 | 1 | 1 | 0 | 2.00 |
Risk and Volatility
American Electric Power has a beta of 0.53, meaning that its share price is 47% less volatile than the S&P 500. Comparatively, MGE Energy has a beta of 0.73, meaning that its share price is 27% less volatile than the S&P 500.
Valuation and Earnings
This table compares American Electric Power and MGE Energy”s top-line revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| American Electric Power | $21.88 billion | 3.45 | $3.58 billion | $6.81 | 20.39 |
| MGE Energy | $743.65 million | 3.95 | $135.89 million | $3.90 | 20.47 |
American Electric Power has higher revenue and earnings than MGE Energy. American Electric Power is trading at a lower price-to-earnings ratio than MGE Energy, indicating that it is currently the more affordable of the two stocks.
Dividends
American Electric Power pays an annual dividend of $3.80 per share and has a dividend yield of 2.7%. MGE Energy pays an annual dividend of $1.90 per share and has a dividend yield of 2.4%. American Electric Power pays out 55.8% of its earnings in the form of a dividend. MGE Energy pays out 48.7% 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 increased its dividend for 15 consecutive years and MGE Energy has increased its dividend for 49 consecutive years.
Insider and Institutional Ownership
75.2% of American Electric Power shares are owned by institutional investors. Comparatively, 52.6% of MGE Energy shares are owned by institutional investors. 0.1% of American Electric Power shares are owned by company insiders. Comparatively, 0.4% 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.
Summary
MGE 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., an electric public utility holding company, engages in the generation, transmission, and distribution of electricity for sale to retail and wholesale customers in the United States. It operates through Vertically Integrated Utilities, Transmission and Distribution Utilities, AEP Transmission Holdco, and Generation & Marketing segments. The company generates electricity using coal and lignite, natural gas, renewable, nuclear, hydro, solar, wind, and other energy sources. It also supplies and markets electric power at wholesale to other electric utility companies, rural electric cooperatives, municipalities, and other market participants. American Electric Power Company, Inc. was incorporated in 1906 and is headquartered in Columbus, Ohio.
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.
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