The Southern (NYSE:SO) and MGE Energy (NASDAQ:MGEE) are both utilities companies, but which is the superior stock? We will compare the two companies based on the strength of their dividends, valuation, analyst recommendations, profitability, institutional ownership, earnings and risk.
Profitability
This table compares The Southern and MGE Energy's net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets |
|---|
| The Southern | 15.80% | 10.08% | 2.69% |
| MGE Energy | 17.18% | 10.21% | 4.38% |
Institutional & Insider Ownership
57.6% of The Southern shares are owned by institutional investors. Comparatively, 47.2% of MGE Energy shares are owned by institutional investors. 0.4% of The Southern 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, hedge funds and endowments believe a stock will outperform the market over the long term.
Dividends
The Southern pays an annual dividend of $2.56 per share and has a dividend yield of 3.9%. MGE Energy pays an annual dividend of $1.48 per share and has a dividend yield of 2.0%. The Southern pays out 82.3% 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 pays out 59.0% of its earnings in the form of a dividend. The Southern has raised its dividend for 19 consecutive years and MGE Energy has raised its dividend for 7 consecutive years. The Southern is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Volatility and Risk
The Southern has a beta of 0.39, suggesting that its stock price is 61% less volatile than the S&P 500. Comparatively, MGE Energy has a beta of 0.49, suggesting that its stock price is 51% less volatile than the S&P 500.
Valuation and Earnings
This table compares The Southern and MGE Energy's revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio |
|---|
| The Southern | $21.42 billion | 3.22 | $4.75 billion | $3.11 | 20.94 |
| MGE Energy | $568.85 million | 4.76 | $86.87 million | $2.51 | 29.84 |
The Southern has higher revenue and earnings than MGE Energy. The Southern is trading at a lower price-to-earnings ratio than MGE Energy, indicating that it is currently the more affordable of the two stocks.
Analyst Ratings
This is a summary of current recommendations for The Southern and MGE Energy, as reported by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score |
|---|
| The Southern | 3 | 2 | 7 | 0 | 2.33 |
| MGE Energy | 1 | 1 | 0 | 0 | 1.50 |
The Southern presently has a consensus target price of $66.3333, suggesting a potential upside of 1.88%. MGE Energy has a consensus target price of $65.00, suggesting a potential downside of 13.22%. Given The Southern's stronger consensus rating and higher possible upside, analysts plainly believe The Southern is more favorable than MGE Energy.
Summary
The Southern beats MGE Energy on 10 of the 17 factors compared between the two stocks.
