OGE Energy (OGE) & American Electric Power (AEP) Financial Comparison

OGE Energy (NYSE: OGE) and American Electric Power (NYSE:AEP) are both utilities companies, but which is the superior investment? We will contrast the two businesses based on the strength of their earnings, institutional ownership, profitability, valuation, risk, dividends and analyst recommendations.

Institutional and Insider Ownership

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63.0% of OGE Energy shares are held by institutional investors. Comparatively, 71.7% of American Electric Power shares are held by institutional investors. 0.5% of OGE Energy shares are held by company insiders. Comparatively, 0.2% of American Electric Power shares are held 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.

Analyst Recommendations

This is a summary of current recommendations for OGE Energy and American Electric Power, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
OGE Energy 0 4 4 0 2.50
American Electric Power 0 5 9 0 2.64

OGE Energy presently has a consensus price target of $36.50, indicating a potential upside of 12.76%. American Electric Power has a consensus price target of $74.31, indicating a potential upside of 8.43%. Given OGE Energy’s higher probable upside, equities research analysts clearly believe OGE Energy is more favorable than American Electric Power.

Valuation & Earnings

This table compares OGE Energy and American Electric Power’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
OGE Energy $2.26 billion 2.86 $619.00 million $1.92 16.86
American Electric Power $15.40 billion 2.19 $1.91 billion $3.68 18.62

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

Profitability

This table compares OGE Energy and American Electric Power’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
OGE Energy 27.38% 10.64% 3.70%
American Electric Power 12.39% 10.05% 2.86%

Dividends

OGE Energy pays an annual dividend of $1.33 per share and has a dividend yield of 4.1%. American Electric Power pays an annual dividend of $2.48 per share and has a dividend yield of 3.6%. OGE Energy pays out 69.3% of its earnings in the form of a dividend. American Electric Power pays out 67.4% 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 has raised its dividend for 11 consecutive years and American Electric Power has raised its dividend for 5 consecutive years. OGE Energy is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Volatility and Risk

OGE Energy has a beta of 0.67, suggesting that its share price is 33% less volatile than the S&P 500. Comparatively, American Electric Power has a beta of 0.17, suggesting that its share price is 83% less volatile than the S&P 500.

Summary

OGE Energy beats American Electric Power on 9 of the 17 factors compared between the two stocks.

OGE Energy Company Profile

OGE Energy Corp., together with its subsidiaries, operates as an energy and energy services provider that offers physical delivery and related services for electricity and natural gas primarily in the south central United States. The company operates in 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. This segment furnishes retail electric service in 267 communities and their contiguous rural and suburban areas; and owns and operates coal-fired, natural gas-fired, wind-powered, and solar-powered generating facilities. The Natural Gas Midstream Operations segment is involved in gathering, processing, transporting, and storing natural gas; and the provision of crude oil gathering services, and interstate and intrastate natural gas pipeline transportation and storage services to natural gas producers, industrial end users, and natural gas marketers. As of December 31, 2017, the company owned and operated interconnected electric generation, transmission, and distribution system, including 10 generating stations with an aggregate capability of 6,304 megawatts; and a transmission system comprising 52 substations and 4,949 structure miles of lines in Oklahoma, and 7 substations and 277 structure miles of lines in Arkansas. Its distribution system consisted of 346 substations, 29,317 structure miles of overhead lines, 2,824 miles of underground conduit, and 10,875 miles of underground conductors in Oklahoma, as well as 30 substations, 2,785 structure miles of overhead lines, 282 miles of underground conduit, and 689 miles of underground conductors in Arkansas. OGE Energy Corp. was founded in 1995 and is headquartered in Oklahoma City, Oklahoma.

American Electric Power Company Profile

American Electric Power Company, Inc., an electric public utility holding company, engages in the generation, transmission, and distribution of electricity for sale to retail and wholesale customers in the United States. The company generates electricity using coal and lignite, natural gas, nuclear, hydroelectric, solar, wind, and other energy sources. It also supplies and markets electric power at wholesale to other electric utility companies, rural electric cooperatives, municipalities, and other market participants. The company owns, leases, or controls approximately 3,675 railcars, 468 barges, 11 towboats, and a coal handling terminal with approximately 18 million tons of annual capacity. American Electric Power Company, Inc. was founded in 1906 and is headquartered in Columbus, Ohio.

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