Reviewing OGE Energy (NYSE:OGE) and NiSource (NYSE:NI)

NiSource (NYSE:NI) and OGE Energy (NYSE:OGE) are both utilities companies, but which is the better investment? We will contrast the two companies based on the strength of their dividends, risk, earnings, valuation, analyst recommendations, institutional ownership and profitability.

Insider & Institutional Ownership

91.6% of NiSource shares are owned by institutional investors. Comparatively, 71.8% of OGE Energy shares are owned by institutional investors. 0.2% of NiSource shares are owned by company insiders. Comparatively, 0.6% of OGE Energy shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Dividends

NiSource pays an annual dividend of $1.20 per share and has a dividend yield of 2.6%. OGE Energy pays an annual dividend of $1.70 per share and has a dividend yield of 3.6%. NiSource pays out 61.5% of its earnings in the form of a dividend. OGE Energy pays out 73.6% 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. NiSource has increased its dividend for 14 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 longer track record of dividend growth.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
NiSource	13.99%	8.07%	2.64%
OGE Energy	14.44%	9.89%	3.32%

Earnings and Valuation

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
NiSource	$6.64 billion	3.29	$929.50 million	$1.95	23.40
OGE Energy	$3.26 billion	2.99	$470.70 million	$2.31	20.49

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

Risk and Volatility

NiSource has a beta of 0.64, indicating that its stock price is 36% less volatile than the S&P 500. Comparatively, OGE Energy has a beta of 0.61, indicating that its stock price is 39% less volatile than the S&P 500.

Analyst Ratings

This is a summary of recent recommendations for NiSource and OGE Energy, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
NiSource	0	3	9	0	2.75
OGE Energy	0	5	6	0	2.55

NiSource presently has a consensus price target of $47.20, suggesting a potential upside of 3.43%. OGE Energy has a consensus price target of $48.11, suggesting a potential upside of 1.64%. Given NiSource’s stronger consensus rating and higher probable upside, equities analysts plainly believe NiSource is more favorable than OGE Energy.

Summary

NiSource beats OGE Energy on 10 of the 17 factors compared between the two stocks.

About NiSource

NiSource Inc., an energy holding company, operates as a regulated natural gas and electric utility company in the United States. It operates in two segments, Gas Distribution Operations and Electric Operations. The company distributes natural gas to approximately 3.3 million customers through approximately 55,000 miles of distribution main pipeline and the associated individual customer service lines; and 1,000 miles of transmission main pipeline in northern Indiana, Ohio, Pennsylvania, Virginia, Kentucky, and Maryland. It also generates, transmits, and distributes electricity to approximately 0.5 million customers in various counties in the northern part of Indiana, as well as engages in wholesale electric and transmission transactions. It owns and operates coal-fired electric generating stations in Wheatfield and Michigan City; combined cycle gas turbine in West Terre Haute; natural gas generating units in Wheatfield; hydro generating plants in Carroll County and White County; wind generating units in White County, Indiana; and solar generating units in Jasper County and White County. The company was formerly known as NIPSCO Industries, Inc. and changed its name to NiSource Inc. in April 1999. NiSource Inc. was founded in 1847 and is headquartered in Merrillville, Indiana.

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.