Analyzing OGE Energy (NYSE:OGE) and FirstEnergy (NYSE:FE)

FirstEnergy (NYSE:FE) and OGE Energy (NYSE:OGE) are both large-cap utilities companies, but which is the superior investment? We will contrast the two businesses based on the strength of their profitability, institutional ownership, valuation, earnings, dividends, risk and analyst recommendations.

Valuation & Earnings

This table compares FirstEnergy and OGE Energy”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
FirstEnergy	$15.09 billion	1.78	$1.02 billion	$2.08	22.33
OGE Energy	$3.26 billion	3.21	$470.70 million	$2.65	19.11

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

Dividends

FirstEnergy pays an annual dividend of $1.86 per share and has a dividend yield of 4.0%. OGE Energy pays an annual dividend of $1.72 per share and has a dividend yield of 3.4%. FirstEnergy pays out 89.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. OGE Energy pays out 64.9% of its earnings in the form of a dividend. FirstEnergy has raised its dividend for 3 consecutive years and OGE Energy has raised its dividend for 18 consecutive years.

Institutional and Insider Ownership

89.4% of FirstEnergy shares are held by institutional investors. Comparatively, 71.8% of OGE Energy shares are held by institutional investors. 0.1% of FirstEnergy shares are held by insiders. Comparatively, 0.6% of OGE Energy shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Profitability

This table compares FirstEnergy and OGE Energy’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
FirstEnergy	7.40%	11.07%	2.73%
OGE Energy	16.36%	10.97%	3.78%

Risk and Volatility

FirstEnergy has a beta of 0.39, meaning that its share price is 61% less volatile than the S&P 500. Comparatively, OGE Energy has a beta of 0.48, meaning that its share price is 52% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent ratings and recommmendations for FirstEnergy and OGE Energy, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
FirstEnergy	0	4	8	0	2.67
OGE Energy	0	6	5	0	2.45

FirstEnergy currently has a consensus price target of $50.77, suggesting a potential upside of 9.32%. OGE Energy has a consensus price target of $50.00, suggesting a potential downside of 1.25%. Given FirstEnergy’s stronger consensus rating and higher possible upside, research analysts plainly believe FirstEnergy is more favorable than OGE Energy.

Summary

FirstEnergy beats OGE Energy on 9 of the 17 factors compared between the two stocks.

About FirstEnergy

FirstEnergy Corp., through its subsidiaries, generates, transmits, and distributes electricity in the United States. It operates through Regulated Distribution and Regulated Transmission segments. The company owns and operates coal-fired, nuclear, hydroelectric, wind, and solar power generating facilities. It operates 24,080 circuit miles of overhead and underground transmission lines; and electric distribution systems, including 274,518 miles of overhead pole line and underground conduit carrying primary, secondary, and street lighting circuits. The company serves approximately 6 million customers in Ohio, Pennsylvania, West Virginia, Maryland, New Jersey, and New York. FirstEnergy Corp. was incorporated in 1996 and is headquartered in Akron, Ohio.

About OGE Energy

OGE Energy Corp., together with its subsidiaries, operates as an energy services provider in the United States. The company generates, transmits, distributes, and sells electric energy. In addition, it provides retail electric service to approximately 896,000 customers, which covers a service area of approximately 30,000 square miles in Oklahoma and western Arkansas; and owns and operates coal-fired, natural gas-fired, wind-powered, and solar-powered generating assets. OGE Energy Corp. was founded in 1902 and is headquartered in Oklahoma City, Oklahoma.