Entergy (ETR) & MGE Energy (MGEE) Critical Review
Entergy (NYSE: ETR) and MGE Energy (NASDAQ:MGEE) are both mid-cap utilities companies, but which is the better business? We will contrast the two companies based on the strength of their earnings, institutional ownership, profitability, dividends, analyst recommendations, risk and valuation.
Risk and Volatility
Entergy has a beta of 0.55, meaning that its share price is 45% less volatile than the S&P 500. Comparatively, MGE Energy has a beta of 0.32, meaning that its share price is 68% less volatile than the S&P 500.
Entergy pays an annual dividend of $3.56 per share and has a dividend yield of 4.4%. MGE Energy pays an annual dividend of $1.29 per share and has a dividend yield of 2.1%. Entergy pays out -72.1% of its earnings in the form of a dividend. MGE Energy pays out 58.9% 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. Entergy has raised its dividend for 42 consecutive years and MGE Energy has raised its dividend for 3 consecutive years. Entergy is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
This table compares Entergy and MGE Energy’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
This is a summary of recent ratings and target prices for Entergy and MGE Energy, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
Entergy currently has a consensus price target of $84.54, indicating a potential upside of 4.58%. Given Entergy’s stronger consensus rating and higher possible upside, equities research analysts clearly believe Entergy is more favorable than MGE Energy.
Valuation & Earnings
This table compares Entergy and MGE Energy’s gross revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Entergy||$10.85 billion||1.34||-$564.50 million||($4.94)||-16.36|
|MGE Energy||$544.74 million||3.90||$75.56 million||$2.19||28.01|
MGE Energy has lower revenue, but higher earnings than Entergy. Entergy is trading at a lower price-to-earnings ratio than MGE Energy, indicating that it is currently the more affordable of the two stocks.
Institutional & Insider Ownership
82.8% of Entergy shares are owned by institutional investors. Comparatively, 38.3% of MGE Energy shares are owned by institutional investors. 0.2% of Entergy shares are owned by insiders. Comparatively, 0.2% of MGE Energy shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.
Entergy beats MGE Energy on 11 of the 17 factors compared between the two stocks.
Entergy Company Profile
Entergy Corporation is a holding company. The Company is an integrated energy company engaged in electric power production and retail electric distribution operations. The Company operates through two business segments: Utility and Entergy Wholesale Commodities. The Utility segment includes the generation, transmission, distribution and sale of electric power to retail and wholesale customers in areas of Arkansas, Mississippi, Texas and Louisiana, including the City of New Orleans and operates a natural gas distribution business. The Entergy Wholesale Commodities segment includes the ownership, operation and decommissioning of nuclear power plants located in the northern United States and the sale of the electric power produced by its operating plants to wholesale customers. As of December 31, 2016, the Company owned and operated power plants with over 30,000 megawatts of aggregate electric generating capacity, including approximately 10,000 megawatts of nuclear-fueled capacity.
MGE Energy Company Profile
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.
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