Contrasting FirstEnergy (NYSE:FE) and OGE Energy (NYSE:OGE)

OGE Energy (NYSE:OGE) and FirstEnergy (NYSE:FE) are both large-cap utilities companies, but which is the better stock? We will compare the two companies based on the strength of their dividends, institutional ownership, earnings, profitability, analyst recommendations, risk and valuation.

Insider & Institutional Ownership

71.8% of OGE Energy shares are held by institutional investors. Comparatively, 89.4% of FirstEnergy shares are held by institutional investors. 0.6% of OGE Energy shares are held by company insiders. Comparatively, 0.1% of FirstEnergy shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Volatility and Risk

OGE Energy has a beta of 0.48, suggesting that its share price is 52% less volatile than the S&P 500. Comparatively, FirstEnergy has a beta of 0.39, suggesting that its share price is 61% less volatile than the S&P 500.

Analyst Ratings

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

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
OGE Energy	0	6	5	0	2.45
FirstEnergy	0	4	8	0	2.67

OGE Energy presently has a consensus price target of $50.00, suggesting a potential downside of 1.25%. FirstEnergy has a consensus price target of $50.77, suggesting a potential upside of 9.32%. Given FirstEnergy’s stronger consensus rating and higher possible upside, analysts clearly believe FirstEnergy is more favorable than OGE Energy.

Earnings and Valuation

This table compares OGE Energy and FirstEnergy”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
OGE Energy	$3.37 billion	3.10	$470.70 million	$2.65	19.11
FirstEnergy	$16.23 billion	1.66	$1.02 billion	$2.08	22.33

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
OGE Energy	16.36%	10.97%	3.78%
FirstEnergy	7.40%	11.07%	2.73%

Dividends

OGE Energy pays an annual dividend of $1.71 per share and has a dividend yield of 3.4%. FirstEnergy pays an annual dividend of $1.86 per share and has a dividend yield of 4.0%. OGE Energy pays out 64.5% of its earnings in the form of a dividend. FirstEnergy pays out 89.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. OGE Energy has raised its dividend for 18 consecutive years and FirstEnergy has raised its dividend for 3 consecutive years.

Summary

FirstEnergy beats OGE Energy on 9 of the 17 factors compared between the two stocks.

About OGE Energy

OGE Energy Corp., together with its subsidiaries, operates as an energy services provider in the United States. The company generates, transmits, distributes, and sells electric energy. In addition, it provides retail electric service to approximately 896,000 customers, which covers a service area of approximately 30,000 square miles in Oklahoma and western Arkansas; and owns and operates coal-fired, natural gas-fired, wind-powered, and solar-powered generating assets. OGE Energy Corp. was founded in 1902 and is headquartered in Oklahoma City, Oklahoma.

About FirstEnergy

FirstEnergy Corp., through its subsidiaries, generates, transmits, and distributes electricity in the United States. It operates through Regulated Distribution and Regulated Transmission segments. The company owns and operates coal-fired, nuclear, hydroelectric, wind, and solar power generating facilities. It operates 24,080 circuit miles of overhead and underground transmission lines; and electric distribution systems, including 274,518 miles of overhead pole line and underground conduit carrying primary, secondary, and street lighting circuits. The company serves approximately 6 million customers in Ohio, Pennsylvania, West Virginia, Maryland, New Jersey, and New York. FirstEnergy Corp. was incorporated in 1996 and is headquartered in Akron, Ohio.