MGE Energy (NASDAQ: MGEE) and Southern Company (The) (NYSE:SO) are both mid-cap utilities companies, but which is the superior business? We will contrast the two companies based on the strength of their valuation, analyst recommendations, risk, profitability, earnings, institutional ownership and dividends.
Earnings and Valuation
This table compares MGE Energy and Southern Company (The)’s gross revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|MGE Energy||$558.93 million||4.11||$178.68 million||$2.23||29.69|
|Southern Company (The)||$22.65 billion||2.23||$5.63 billion||$0.67||75.58|
Southern Company (The) has higher revenue and earnings than MGE Energy. MGE Energy is trading at a lower price-to-earnings ratio than Southern Company (The), indicating that it is currently the more affordable of the two stocks.
Volatility and Risk
MGE Energy has a beta of 0.36, meaning that its share price is 64% less volatile than the S&P 500. Comparatively, Southern Company (The) has a beta of 0.13, meaning that its share price is 87% less volatile than the S&P 500.
This is a summary of current ratings and price targets for MGE Energy and Southern Company (The), as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Southern Company (The)||2||6||7||0||2.33|
Southern Company (The) has a consensus target price of $49.21, suggesting a potential downside of 2.82%. Given Southern Company (The)’s higher possible upside, analysts clearly believe Southern Company (The) is more favorable than MGE Energy.
This table compares MGE Energy and Southern Company (The)’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Southern Company (The)||2.93%||11.30%||2.64%|
Institutional and Insider Ownership
37.5% of MGE Energy shares are held by institutional investors. Comparatively, 53.3% of Southern Company (The) shares are held by institutional investors. 0.2% of MGE Energy shares are held by company insiders. Comparatively, 1.0% of Southern Company (The) shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.
MGE Energy pays an annual dividend of $1.29 per share and has a dividend yield of 1.9%. Southern Company (The) pays an annual dividend of $2.32 per share and has a dividend yield of 4.6%. MGE Energy pays out 57.8% of its earnings in the form of a dividend. Southern Company (The) pays out 346.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. MGE Energy has raised its dividend for 41 consecutive years and Southern Company (The) has raised its dividend for 15 consecutive years.
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.
About Southern Company (The)
The Southern Company (Southern Company) is a holding company. The Company owns all of the stock of the traditional electric operating companies and the parent entities of Southern Power Company (Southern Power) and Southern Company Gas, and owns other direct and indirect subsidiaries. The Company’s segments include Gas distribution operations, Gas marketing services, Wholesale gas services, Gas midstream operations and All other. The Gas distribution operations segment includes natural gas local distribution utilities that construct, manage, and maintain intrastate natural gas pipelines and gas distribution facilities in seven states. The Gas marketing services segment provides natural gas commodity and related services to customers markets that provide for customer choice. The Wholesale gas services segment engages in natural gas storage and gas pipeline arbitrage. The Gas midstream operations consist primarily of gas pipeline investments, with storage and fuels.
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