Comparing MGE Energy (MGEE) and Duke Energy Corporation (DUK)

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

Institutional & Insider Ownership

38.0% of MGE Energy shares are owned by institutional investors. Comparatively, 56.3% of Duke Energy Corporation shares are owned by institutional investors. 0.2% of MGE Energy shares are owned by company insiders. Comparatively, 0.1% of Duke Energy Corporation shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Analyst Recommendations

This is a summary of recent ratings and recommmendations for MGE Energy and Duke Energy Corporation, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
MGE Energy 0 1 0 0 2.00
Duke Energy Corporation 1 10 2 0 2.08

Duke Energy Corporation has a consensus target price of $86.55, suggesting a potential downside of 3.71%. Given Duke Energy Corporation’s stronger consensus rating and higher possible upside, analysts clearly believe Duke Energy Corporation is more favorable than MGE Energy.

Profitability

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

Net Margins Return on Equity Return on Assets
MGE Energy 13.52% 10.31% 4.23%
Duke Energy Corporation 9.09% 7.54% 2.31%

Dividends

MGE Energy pays an annual dividend of $1.29 per share and has a dividend yield of 2.0%. Duke Energy Corporation pays an annual dividend of $3.56 per share and has a dividend yield of 4.0%. MGE Energy pays out 58.6% of its earnings in the form of a dividend. Duke Energy Corporation pays out 117.5% 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 10 consecutive years and Duke Energy Corporation has raised its dividend for 41 consecutive years. Duke Energy Corporation is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Valuation and Earnings

This table compares MGE Energy and Duke Energy Corporation’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
MGE Energy $544.74 million 4.09 $75.56 million $2.20 29.18
Duke Energy Corporation $22.74 billion 2.77 $2.15 billion $3.03 29.66

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

Volatility and Risk

MGE Energy has a beta of 0.34, suggesting that its stock price is 66% less volatile than the S&P 500. Comparatively, Duke Energy Corporation has a beta of 0.26, suggesting that its stock price is 74% less volatile than the S&P 500.

Summary

Duke Energy Corporation beats MGE Energy on 9 of the 17 factors compared between the two stocks.

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.

Duke Energy Corporation Company Profile

Duke Energy Corporation (Duke Energy) is an energy company. The Company operates through three segments: Electric Utilities and Infrastructure; Gas Utilities and Infrastructure, and Commercial Renewables. The Company operates in the United States through its direct and indirect subsidiaries. The Electric Utilities and Infrastructure segment provides retail electric service through the generation, transmission, distribution and sale of electricity to approximately 7.5 million customers within the Southeast and Midwest regions of the United States. The operations include electricity sold wholesale to municipalities, electric cooperative utilities and other load-serving entities. The Gas Utilities and Infrastructure segment serves residential, commercial, industrial and power generation natural gas customers. The Commercial Renewables primarily acquires, builds, develops and operates wind and solar renewable generation throughout the continental United States.

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