OGE Energy (NYSE:OGE – Get Free Report) and CMS Energy (NYSE:CMS – Get Free Report) are both utilities companies, but which is the superior investment? We will compare the two businesses based on the strength of their profitability, institutional ownership, dividends, risk, analyst recommendations, earnings and valuation.
Profitability
This table compares OGE Energy and CMS Energy’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| OGE Energy | 14.44% | 9.89% | 3.32% |
| CMS Energy | 12.54% | 12.09% | 2.87% |
Volatility & Risk
OGE Energy has a beta of 0.62, suggesting that its stock price is 38% less volatile than the S&P 500. Comparatively, CMS Energy has a beta of 0.47, suggesting that its stock price is 53% less volatile than the S&P 500.
Earnings & Valuation
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| OGE Energy | $3.26 billion | 3.07 | $470.70 million | $2.31 | 21.01 |
| CMS Energy | $8.54 billion | 2.76 | $1.07 billion | $3.53 | 21.82 |
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.
Dividends
OGE Energy pays an annual dividend of $1.70 per share and has a dividend yield of 3.5%. CMS Energy pays an annual dividend of $2.28 per share and has a dividend yield of 3.0%. OGE Energy pays out 73.6% of its earnings in the form of a dividend. CMS Energy pays out 64.6% 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. OGE Energy has increased its dividend for 18 consecutive years and CMS Energy has increased its dividend for 3 consecutive years. OGE Energy is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Analyst Recommendations
This is a summary of current ratings and price targets for OGE Energy and CMS Energy, as provided by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| OGE Energy | 0 | 5 | 5 | 0 | 2.50 |
| CMS Energy | 0 | 6 | 8 | 0 | 2.57 |
OGE Energy currently has a consensus price target of $47.63, indicating a potential downside of 1.89%. CMS Energy has a consensus price target of $79.08, indicating a potential upside of 2.66%. Given CMS Energy’s stronger consensus rating and higher possible upside, analysts clearly believe CMS Energy is more favorable than OGE Energy.
Insider and Institutional Ownership
71.8% of OGE Energy shares are held by institutional investors. Comparatively, 93.6% of CMS Energy shares are held by institutional investors. 0.6% of OGE Energy shares are held by company insiders. Comparatively, 0.4% of CMS Energy shares are held by company 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
CMS Energy beats OGE Energy on 10 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 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.
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