Critical Analysis: MGE Energy (NASDAQ:MGEE) vs. Kenon (NYSE:KEN)

Kenon (NYSE:KEN) and MGE Energy (NASDAQ:MGEE) are both mid-cap utilities companies, but which is the superior business? We will compare the two companies based on the strength of their earnings, institutional ownership, profitability, valuation, analyst recommendations, risk and dividends.

Analyst Recommendations

This is a breakdown of recent ratings for Kenon and MGE Energy, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Kenon	0	1	0	0	2.00
MGE Energy	1	2	0	0	1.67

MGE Energy has a consensus target price of $78.00, suggesting a potential upside of 3.34%. Given MGE Energy’s higher probable upside, analysts clearly believe MGE Energy is more favorable than Kenon.

Volatility and Risk

Kenon has a beta of 1.14, indicating that its share price is 14% more volatile than the S&P 500. Comparatively, MGE Energy has a beta of 0.81, indicating that its share price is 19% less volatile than the S&P 500.

Profitability

This table compares Kenon and MGE Energy’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Kenon	11.53%	2.84%	1.70%
MGE Energy	18.27%	10.60%	4.59%

Insider & Institutional Ownership

13.4% of Kenon shares are held by institutional investors. Comparatively, 52.6% of MGE Energy shares are held by institutional investors. 0.1% of Kenon shares are held by insiders. Comparatively, 0.2% of MGE Energy shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Dividends

Kenon pays an annual dividend of $4.80 per share and has a dividend yield of 6.0%. MGE Energy pays an annual dividend of $1.90 per share and has a dividend yield of 2.5%. Kenon pays out 623.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. MGE Energy pays out 51.1% of its earnings in the form of a dividend. Kenon has raised its dividend for 2 consecutive years and MGE Energy has raised its dividend for 49 consecutive years.

Valuation and Earnings

This table compares Kenon and MGE Energy”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Kenon	$872.08 million	4.78	$100.51 million	$0.77	103.86
MGE Energy	$743.65 million	3.71	$135.89 million	$3.72	20.29

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

Summary

MGE Energy beats Kenon on 10 of the 16 factors compared between the two stocks.

About Kenon

Kenon Holdings Ltd., through its subsidiaries, operates as an owner, developer, and operator of power generation facilities in Israel, the United States, and internationally. It operates through OPC Power Plants, CPV Group, and ZIM segments. The company engages in the generation and supply of electricity and energy; development, construction, and management of solar and wind energy, and conventional natural gas-fired power plants; and provision of container liner shipping services. It also operates a fleet of 150 vessels. Kenon Holdings Ltd. was incorporated in 2014 and is based in Singapore. Kenon Holdings Ltd. operates as a subsidiary of Ansonia Holdings Singapore B.V.

About MGE Energy

MGE Energy, Inc., through its subsidiaries, operates as a public utility holding company primarily in the United States. It operates through Regulated Electric Utility Operations; Regulated Gas Utility Operations; Nonregulated Energy Operations; Transmission Investments; and All Other segments. The company generates, purchases, and distributes electricity and natural gas in Wisconsin and Iowa; owns and leases electric generating capacity; and plans, constructs, operates, maintains, and expands transmission facilities to provide transmission power services. It generates electricity from coal-fired, gas-fired, and renewable energy sources. As of December 31, 2023, the company owned and operated 835 miles of overhead electric distribution lines; 1,330 miles of underground electric distribution cables; 49 substations with an installed capacity of 1.2 million kVA; and gas facilities, including 3,066 miles of distribution mains, as well as supplied electric service to approximately 163,000 customers. MGE Energy, Inc. founded in 2001 and is headquartered in Madison, Wisconsin.