Head to Head Comparison: NextEra Energy (NEE) and OGE Energy (NYSE:OGE)

OGE Energy (NYSE:OGE) and NextEra Energy (NYSE:NEE) are both utilities companies, but which is the better business? We will contrast the two businesses based on the strength of their risk, valuation, profitability, earnings, analyst recommendations, institutional ownership and dividends.

Dividends

OGE Energy pays an annual dividend of $1.33 per share and has a dividend yield of 3.5%. NextEra Energy pays an annual dividend of $4.44 per share and has a dividend yield of 2.6%. OGE Energy pays out 69.3% of its earnings in the form of a dividend. NextEra Energy pays out 66.3% 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 has increased its dividend for 11 consecutive years and NextEra Energy has increased its dividend for 8 consecutive years. OGE Energy is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Valuation and Earnings

This table compares OGE Energy and NextEra Energy’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 3.32 $619.00 million $1.92 19.57
NextEra Energy $17.20 billion 4.75 $5.38 billion $6.70 25.87

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

Insider and Institutional Ownership

61.5% of OGE Energy shares are owned by institutional investors. Comparatively, 76.3% of NextEra Energy shares are owned by institutional investors. 0.4% of OGE Energy shares are owned by company insiders. Comparatively, 0.6% of NextEra Energy shares are owned by company 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 breakdown of current recommendations for OGE Energy and NextEra Energy, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
OGE Energy 0 3 2 0 2.40
NextEra Energy 0 3 11 0 2.79

OGE Energy presently has a consensus target price of $36.75, indicating a potential downside of 2.21%. NextEra Energy has a consensus target price of $168.23, indicating a potential downside of 2.94%. Given OGE Energy’s higher probable upside, analysts plainly believe OGE Energy is more favorable than NextEra Energy.

Volatility and Risk

OGE Energy has a beta of 0.62, suggesting that its share price is 38% less volatile than the S&P 500. Comparatively, NextEra Energy has a beta of 0.2, suggesting that its share price is 80% less volatile than the S&P 500.

Profitability

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

Net Margins Return on Equity Return on Assets
OGE Energy 28.26% 10.74% 3.90%
NextEra Energy 49.10% 10.49% 3.52%

Summary

NextEra Energy beats OGE Energy on 11 of the 17 factors compared between the two stocks.

About OGE Energy

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.

About NextEra Energy

NextEra Energy, Inc., through its subsidiaries, generates, transmits, distributes, and sells electric power to retail and wholesale customers in North America. The company generates electricity through wind, solar, nuclear, and natural gas-fired facilities. It also provides risk management services related to power and gas consumption. As of February 16, 2018, the company operated approximately 46,790 megawatts of net generating capacity. As of December 31, 2017, it served approximately 10 million people through approximately 5 million customer accounts in the east and lower west coasts of Florida with approximately 75,000 circuit miles of transmission and distribution lines and approximately 620 substations. The company was formerly known as FPL Group, Inc. and changed its name to NextEra Energy, Inc. in 2010. NextEra Energy, Inc. was founded in 1925 and is headquartered in Juno Beach, Florida.

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