Comparing OGE Energy (NYSE:OGE) & Southern (NYSE:SO)

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Southern	16.00%	13.57%	3.52%
OGE Energy	16.36%	10.97%	3.78%

Dividends

Southern pays an annual dividend of $3.04 per share and has a dividend yield of 3.2%. OGE Energy pays an annual dividend of $1.72 per share and has a dividend yield of 3.4%. Southern pays out 69.2% of its earnings in the form of a dividend. OGE Energy pays out 64.9% 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. Southern has increased its dividend for 25 consecutive years and OGE Energy has increased its dividend for 18 consecutive years. OGE Energy is clearly the better dividend stock, given its higher yield and lower payout ratio.

Risk & Volatility

Southern has a beta of 0.3, suggesting that its stock price is 70% less volatile than the S&P 500. Comparatively, OGE Energy has a beta of 0.48, suggesting that its stock price is 52% less volatile than the S&P 500.

Valuation and Earnings

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Southern	$29.55 billion	3.69	$4.34 billion	$4.39	21.32
OGE Energy	$3.26 billion	3.23	$470.70 million	$2.65	19.21

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

Analyst Recommendations

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

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Southern	2	11	8	0	2.29
OGE Energy	0	6	5	0	2.45

Southern presently has a consensus price target of $97.32, indicating a potential upside of 3.97%. OGE Energy has a consensus price target of $50.00, indicating a potential downside of 1.80%. Given Southern’s higher possible upside, analysts clearly believe Southern is more favorable than OGE Energy.

Institutional & Insider Ownership

64.1% of Southern shares are held by institutional investors. Comparatively, 71.8% of OGE Energy shares are held by institutional investors. 0.2% of Southern shares are held by insiders. Comparatively, 0.6% of OGE Energy shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Summary

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

About Southern

Southern Company is an energy holding company based in Atlanta, Georgia. Through its subsidiaries, it generates, transmits and distributes electricity and provides natural gas service, primarily across the southeastern United States. Its electric utility businesses include Alabama Power, Georgia Power and Mississippi Power, which serve customers in their respective states. Southern Company also owns Southern Power, which develops and operates wholesale power generation assets, and Southern Company Gas, whose businesses distribute natural gas to customers in several states.

About OGE Energy

OGE Energy Corp. is an energy holding company based in Oklahoma City. Its principal business is Oklahoma Gas and Electric Company (OG&E), a regulated electric utility that generates, transmits, distributes and sells electricity to residential, commercial and industrial customers. OG&E serves communities in Oklahoma and western Arkansas. Its operations include power plants and the electric infrastructure used to deliver electricity to customers across its service area. The utility traces its origins to 1902, when it began providing electricity in what was then Oklahoma Territory.