Analyzing CMS Energy (NYSE:CMS) & OGE Energy (NYSE:OGE)

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

Dividends

CMS Energy pays an annual dividend of $2.28 per share and has a dividend yield of 3.0%. OGE Energy pays an annual dividend of $1.70 per share and has a dividend yield of 3.5%. CMS Energy pays out 64.6% of its earnings in the form of a dividend. OGE Energy pays out 73.6% 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. CMS Energy has raised its dividend for 3 consecutive years and OGE Energy has raised its dividend for 18 consecutive years. OGE Energy is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Earnings & Valuation

This table compares CMS Energy and OGE Energy”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
CMS Energy	$8.54 billion	2.77	$1.07 billion	$3.53	21.88
OGE Energy	$3.26 billion	3.05	$470.70 million	$2.31	20.89

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

Volatility & Risk

CMS Energy has a beta of 0.46, suggesting that its stock price is 54% less volatile than the S&P 500. Comparatively, OGE Energy has a beta of 0.61, suggesting that its stock price is 39% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of current recommendations and price targets for CMS Energy and OGE Energy, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
CMS Energy	0	6	8	0	2.57
OGE Energy	0	5	5	0	2.50

CMS Energy currently has a consensus price target of $79.38, suggesting a potential upside of 2.78%. OGE Energy has a consensus price target of $47.63, suggesting a potential downside of 1.30%. Given CMS Energy’s stronger consensus rating and higher probable upside, equities research analysts plainly believe CMS Energy is more favorable than OGE Energy.

Insider and Institutional Ownership

93.6% of CMS Energy shares are owned by institutional investors. Comparatively, 71.8% of OGE Energy shares are owned by institutional investors. 0.4% of CMS Energy shares are owned by insiders. Comparatively, 0.6% of OGE Energy shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
CMS Energy	12.54%	12.09%	2.87%
OGE Energy	14.44%	9.89%	3.32%

Summary

CMS Energy beats OGE Energy on 10 of the 17 factors compared between the two stocks.

About CMS Energy

CMS Energy Corporation operates as an energy company primarily in Michigan. The company operates through three segments: Electric Utility; Gas Utility; and Enterprises. The Electric Utility segment is involved in the generation, purchase, transmission, distribution, and sale of electricity. This segment generates electricity through coal, wind, gas, renewable energy, oil, and nuclear sources. Its distribution system comprises 208 miles of high-voltage distribution overhead lines; 4 miles of high-voltage distribution underground lines; 4,428 miles of high-voltage distribution overhead lines; 19 miles of high-voltage distribution underground lines; 82,474 miles of electric distribution overhead lines; 9,395 miles of underground distribution lines; 1,093 substations; and 3 battery facilities. The Gas Utility segment engages in the purchase, transmission, storage, distribution, and sale of natural gas, which includes 2,392 miles of transmission lines; 15 gas storage fields; 28,065 miles of distribution mains; and 8 compressor stations. The Enterprises segment is involved in the independent power production and marketing, including the development and operation of renewable generation. It serves 1.9 million electric and 1.8 million gas customers, including residential, commercial, and diversified industrial customers. The company was incorporated in 1987 and is headquartered in Jackson, Michigan.

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.