Critical Contrast: Dominion Energy (NYSE:D) & OGE Energy (OGE)

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

Dividends

Dominion Energy pays an annual dividend of $3.08 per share and has a dividend yield of 4.1%. OGE Energy pays an annual dividend of $1.33 per share and has a dividend yield of 4.4%. Dominion Energy pays out 62.7% of its earnings in the form of a dividend. OGE Energy pays out 69.6% 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. Dominion Energy has increased its dividend for 9 consecutive years and OGE Energy has increased its dividend for 11 consecutive years. OGE Energy is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Ratings

This is a breakdown of current ratings for Dominion Energy and OGE Energy, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Dominion Energy 0 9 4 0 2.31
OGE Energy 0 5 2 0 2.29

Dominion Energy currently has a consensus price target of $81.44, suggesting a potential upside of 9.50%. OGE Energy has a consensus price target of $37.40, suggesting a potential upside of 23.07%. Given OGE Energy’s higher probable upside, analysts plainly believe OGE Energy is more favorable than Dominion Energy.

Profitability

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

Net Margins Return on Equity Return on Assets
Dominion Energy 24.92% 12.99% 3.09%
OGE Energy 16.69% 10.92% 3.73%

Volatility and Risk

Dominion Energy has a beta of 0.2, indicating that its share price is 80% less volatile than the S&P 500. Comparatively, OGE Energy has a beta of 0.84, indicating that its share price is 16% less volatile than the S&P 500.

Earnings & Valuation

This table compares Dominion Energy and OGE Energy’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Dominion Energy $12.59 billion 3.81 $3.14 billion $4.91 15.15
OGE Energy $2.26 billion 2.69 $338.20 million $1.91 15.91

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

Insider and Institutional Ownership

64.6% of Dominion Energy shares are owned by institutional investors. Comparatively, 62.2% of OGE Energy shares are owned by institutional investors. 0.4% of Dominion Energy shares are owned by insiders. Comparatively, 0.5% of OGE Energy shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Summary

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

About Dominion Energy

Dominion Energy, Inc., formerly Dominion Resources, Inc., is a producer and transporter of energy. Dominion is focused on its investment in regulated electric generation, transmission and distribution and regulated natural gas transmission and distribution infrastructure. It operates through three segments: Dominion Virginia Power operating segment (DVP), Dominion Generation, Dominion Energy, and Corporate and Other. The DVP segment includes regulated electric distribution and regulated electric transmission. The Dominion Generation segment includes regulated electric fleet and merchant electric fleet. The Dominion Energy segment includes gas transmission and storage, gas gathering and processing, liquefied natural gas import and storage, and nonregulated retail energy marketing. As of December 31, 2016, Dominion served utility and retail energy customers, and operated an underground natural gas storage system with approximately one trillion cubic feet of storage capacity.

About OGE Energy

OGE Energy Corp. (OGE Energy) is an energy and energy services provider offering physical delivery and related services for both electricity and natural gas primarily in the south central United States. The Company operates through 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. Its operations are conducted through Oklahoma Gas and Electric Company (OG&E). OG&E is an electric utility in Oklahoma and its franchised service territory includes Fort Smith, Arkansas and the surrounding communities. The natural gas midstream operations segment represents the Company’s investment in Enable Midstream Partners, LP (Enable) through subsidiaries, and ultimately OGE Enogex Holdings LLC (OGE Holdings). Enable’s assets and operations are organized into two segments: gathering and processing, and transportation and storage.

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