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

Risk & Volatility

OGE Energy Corporation has a beta of 0.93, suggesting that its share price is 7% less volatile than the S&P 500. Comparatively, FirstEnergy Corporation has a beta of 0.24, suggesting that its share price is 76% less volatile than the S&P 500.

Dividends

OGE Energy Corporation pays an annual dividend of $1.33 per share and has a dividend yield of 3.8%. FirstEnergy Corporation pays an annual dividend of $1.44 per share and has a dividend yield of 4.2%. OGE Energy Corporation pays out 69.6% of its earnings in the form of a dividend. FirstEnergy Corporation pays out -12.3% 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. OGE Energy Corporation has increased its dividend for 10 consecutive years. FirstEnergy Corporation is clearly the better dividend stock, given its higher yield and lower payout ratio.

Profitability

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

Net Margins Return on Equity Return on Assets
OGE Energy Corporation 16.69% 10.92% 3.73%
FirstEnergy Corporation -35.99% 19.29% 2.79%

Earnings & Valuation

This table compares OGE Energy Corporation and FirstEnergy Corporation’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
OGE Energy Corporation $2.26 billion 3.09 $338.20 million $1.91 18.28
FirstEnergy Corporation $14.56 billion 1.05 -$6.18 billion ($11.70) -2.93

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

Institutional & Insider Ownership

62.5% of OGE Energy Corporation shares are owned by institutional investors. Comparatively, 81.6% of FirstEnergy Corporation shares are owned by institutional investors. 0.5% of OGE Energy Corporation shares are owned by insiders. Comparatively, 0.3% of FirstEnergy Corporation shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Analyst Ratings

This is a summary of recent recommendations and price targets for OGE Energy Corporation and FirstEnergy Corporation, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
OGE Energy Corporation 1 5 1 0 2.00
FirstEnergy Corporation 0 11 4 0 2.27

OGE Energy Corporation presently has a consensus target price of $36.67, suggesting a potential upside of 5.03%. FirstEnergy Corporation has a consensus target price of $34.21, suggesting a potential downside of 0.09%. Given OGE Energy Corporation’s higher possible upside, research analysts clearly believe OGE Energy Corporation is more favorable than FirstEnergy Corporation.

Summary

OGE Energy Corporation beats FirstEnergy Corporation on 10 of the 17 factors compared between the two stocks.

About OGE Energy Corporation

OGE Energy Corp. (OGE Energy) is an energy and energy services provider offering physical delivery and related services for both electricity and natural gas primarily in the south central United States. The Company operates through two segments: electric utility and natural gas midstream operations. The electric utility segment generates, transmits, distributes and sells electric energy in Oklahoma and western Arkansas. Its operations are conducted through Oklahoma Gas and Electric Company (OG&E). OG&E is an electric utility in Oklahoma and its franchised service territory includes Fort Smith, Arkansas and the surrounding communities. The natural gas midstream operations segment represents the Company’s investment in Enable Midstream Partners, LP (Enable) through subsidiaries, and ultimately OGE Enogex Holdings LLC (OGE Holdings). Enable’s assets and operations are organized into two segments: gathering and processing, and transportation and storage.

About FirstEnergy Corporation

FirstEnergy Corp. is a holding company. The Company is engaged in holding, directly or indirectly, all of the outstanding equity of its principal subsidiaries. Its segments include Regulated Distribution, Regulated Transmission, Competitive Energy Services (CES) and Corporate/Other. As of December 31, 2016, the Regulated Distribution segment distributed electricity through the Company’s 10 utility operating companies, serving approximately six million customers, and purchased power for its provider of last resort (POLR), standard offer service (SOS), standard offer service (SSO) and default service requirements in Ohio, Pennsylvania, New Jersey and Maryland. The Regulated Transmission segment transmits electricity through transmission facilities owned and operated by American Transmission Systems, Incorporated (ATSI) and Trans-Allegheny Interstate Line Company (TrAIL). The CES segment primarily supplies electricity to end use customers through retail and wholesale arrangements.

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