Head-To-Head Survey: PG&E (PCG) vs. MGE Energy (MGEE)

PG&E (NYSE: PCG) and MGE Energy (NASDAQ:MGEE) are both mid-cap utilities companies, but which is the better stock? We will compare the two companies based on the strength of their risk, valuation, dividends, analyst recommendations, profitability, institutional ownership and earnings.

Analyst Ratings

This is a summary of recent ratings and recommmendations for PG&E and MGE Energy, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
PG&E 1 9 5 0 2.27
MGE Energy 0 1 0 0 2.00

PG&E presently has a consensus price target of $62.59, indicating a potential upside of 41.31%. Given PG&E’s stronger consensus rating and higher possible upside, research analysts clearly believe PG&E is more favorable than MGE Energy.

Dividends

PG&E pays an annual dividend of $2.12 per share and has a dividend yield of 4.8%. MGE Energy pays an annual dividend of $1.29 per share and has a dividend yield of 2.1%. PG&E pays out 48.7% 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. PG&E has raised its dividend for 2 consecutive years and MGE Energy has raised its dividend for 41 consecutive years. PG&E is clearly the better dividend stock, given its higher yield and lower payout ratio.

Volatility & Risk

PG&E has a beta of 0.14, meaning that its stock price is 86% less volatile than the S&P 500. Comparatively, MGE Energy has a beta of 0.32, meaning that its stock price is 68% less volatile than the S&P 500.

Institutional and Insider Ownership

81.1% of PG&E shares are owned by institutional investors. Comparatively, 38.3% of MGE Energy shares are owned by institutional investors. 0.2% of PG&E shares are owned by company insiders. Comparatively, 0.2% of MGE Energy shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Earnings and Valuation

This table compares PG&E and MGE Energy’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
PG&E $17.67 billion 1.29 $1.41 billion $4.35 10.18
MGE Energy $544.74 million 3.91 $75.56 million $2.19 28.06

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

Profitability

This table compares PG&E and MGE Energy’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
PG&E 12.59% 11.94% 3.21%
MGE Energy 13.52% 10.31% 4.23%

Summary

PG&E beats MGE Energy on 10 of the 17 factors compared between the two stocks.

About PG&E

PG&E Corporation is a holding company. The Company’s primary operating subsidiary is Pacific Gas and Electric Company (the Utility), which operates in northern and central California. The Utility is engaged in the sale and delivery of electricity and natural gas to customers. The Utility generates electricity and provides electricity transmission and distribution services throughout its service territory in northern and central California to residential, commercial, industrial, and agricultural customers. The Utility provides bundled services (electricity, transmission and distribution services) to various customers in its service territory. As of December 31, 2016, the Utility owned approximately 18,400 circuit miles of interconnected transmission lines operating at voltages ranging from 60 kilovolt to 500 kilovolt. As of December 31, 2016, the Utility also operated 92 electric transmission substations with a capacity of approximately 64,600 megavolt ampere (MVA).

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.

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