Contrasting MGE Energy (NASDAQ:MGEE) & Iberdrola (OTCMKTS:IBDRY)

Iberdrola (OTCMKTS:IBDRY) and MGE Energy (NASDAQ:MGEE) are both utilities companies, but which is the better investment? We will compare the two businesses based on the strength of their earnings, analyst recommendations, valuation, institutional ownership, dividends, risk and profitability.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Iberdrola	12.10%	8.99%	3.42%
MGE Energy	18.55%	10.65%	4.67%

Risk and Volatility

Iberdrola has a beta of 0.71, meaning that its share price is 29% less volatile than the S&P 500. Comparatively, MGE Energy has a beta of 0.82, meaning that its share price is 18% less volatile than the S&P 500.

Valuation and Earnings

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Iberdrola	$48.42 billion	3.29	$6.07 billion	$3.61	26.45
MGE Energy	$676.94 million	4.47	$120.57 million	$3.69	22.46

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

Institutional and Insider Ownership

0.0% of Iberdrola shares are held by institutional investors. Comparatively, 52.6% of MGE Energy shares are held by institutional investors. 0.2% of MGE Energy shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Analyst Ratings

This is a breakdown of current ratings and recommmendations for Iberdrola and MGE Energy, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Iberdrola	1	3	2	1	2.43
MGE Energy	1	2	0	0	1.67

MGE Energy has a consensus price target of $78.00, suggesting a potential downside of 5.89%. Given MGE Energy’s higher probable upside, analysts plainly believe MGE Energy is more favorable than Iberdrola.

Dividends

Iberdrola pays an annual dividend of $1.80 per share and has a dividend yield of 1.9%. MGE Energy pays an annual dividend of $1.90 per share and has a dividend yield of 2.3%. Iberdrola pays out 49.9% of its earnings in the form of a dividend. MGE Energy pays out 51.5% 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. MGE Energy has raised its dividend for 49 consecutive years. MGE Energy is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

MGE Energy beats Iberdrola on 11 of the 18 factors compared between the two stocks.

About Iberdrola

Iberdrola, S.A. engages in the generation, transmission, distribution, and supply of electricity in Spain, the United Kingdom, the United States, Mexico, Brazil, Germany, France, and Australia. It generates electricity from renewable sources, such as onshore and offshore wind, hydro, photovoltaic, combined cycle gas, and conventional nuclear, as well as through batteries. The company is also involved in the purchase and sale of electricity and gas on wholesale markets; energy retail supply activities, such as gas and electricity, and other products and services, including hydrogen, as well as non-renewable generation; and production of green hydrogen. It has a total installed capacity of 62,871 MW. In addition, the company offers heat pumps, self-consumption, electric mobility, solar, etc. services to residential customers; and management of energy facilities, as well as supplies green H2, industrial heat, etc. to industrial customers. Iberdrola, S.A. was founded in 1840 and is based in Bilbao, Spain.

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.