Critical Comparison: MGE Energy (NASDAQ:MGEE) versus Hawaiian Electric Industries (NYSE:HE)

Hawaiian Electric Industries (NYSE:HE) and MGE Energy (NASDAQ:MGEE) are both utilities companies, but which is the better stock? We will contrast the two companies based on the strength of their dividends, profitability, earnings, valuation, analyst recommendations, risk and institutional ownership.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Hawaiian Electric Industries	6.58%	7.02%	1.37%
MGE Energy	20.60%	11.59%	4.97%

Volatility & Risk

Hawaiian Electric Industries has a beta of 0.5, suggesting that its stock price is 50% less volatile than the S&P 500. Comparatively, MGE Energy has a beta of 0.68, suggesting that its stock price is 32% less volatile than the S&P 500.

Valuation and Earnings

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Hawaiian Electric Industries	$3.50 billion	0.43	$126.28 million	$1.32	6.54
MGE Energy	$783.85 million	3.82	$135.89 million	$4.33	18.28

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

Analyst Ratings

This is a summary of current recommendations and price targets for Hawaiian Electric Industries and MGE Energy, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Hawaiian Electric Industries	3	2	0	0	1.40
MGE Energy	1	3	2	0	2.17

Hawaiian Electric Industries currently has a consensus target price of $7.67, suggesting a potential downside of 11.21%. MGE Energy has a consensus target price of $80.75, suggesting a potential upside of 2.00%. Given MGE Energy’s stronger consensus rating and higher probable upside, analysts clearly believe MGE Energy is more favorable than Hawaiian Electric Industries.

Insider and Institutional Ownership

59.9% of Hawaiian Electric Industries shares are held by institutional investors. Comparatively, 52.6% of MGE Energy shares are held by institutional investors. 0.2% of Hawaiian Electric Industries shares are held by company insiders. Comparatively, 0.4% of MGE Energy shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Dividends

Hawaiian Electric Industries pays an annual dividend of $1.44 per share and has a dividend yield of 16.7%. MGE Energy pays an annual dividend of $2.03 per share and has a dividend yield of 2.6%. Hawaiian Electric Industries pays out 109.1% 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 46.9% of its earnings in the form of a dividend. MGE Energy has increased its dividend for 49 consecutive years.

Summary

MGE Energy beats Hawaiian Electric Industries on 14 of the 17 factors compared between the two stocks.

About Hawaiian Electric Industries

Hawaiian Electric Industries, Inc. (HEI) is a Hawaii-based holding company whose businesses include electric utility operations and banking. Its electric utility subsidiary, Hawaiian Electric, generates and purchases power and delivers electricity to customers on Oahu, Maui, Molokai, Lanai and Hawaii Island. HEI also owns American Savings Bank, which provides consumer and commercial banking services in Hawaii. Through its businesses, the company serves communities across the state and supports efforts to advance cleaner energy and strengthen Hawaii’s energy system.

About MGE Energy

MGE Energy, Inc. is a public utility holding company based in Madison, Wisconsin. Its principal subsidiary, Madison Gas and Electric Company (MGE), provides electric and natural gas service to customers in Madison and surrounding communities in south-central Wisconsin. MGE’s operations include generating and purchasing electricity, delivering power through its electric system, and distributing natural gas. The company also invests in energy-related businesses, including projects that support renewable energy and other power-generation resources.