We are tweaking our Top 15 Utilities model portfolio by adding OGE Energy (OGE), explains growth and income expert Richard Moroney, editor of Dow Theory Forecasts.
OGE delivered an impressive June quarter, with earnings per share rising 10% and sales 15%; both metrics comfortably topped expectations.
Per-share profits are projected to climb 6% this year on sales growth of 18%, with analyst estimates steadily drifting higher over the past 90 days.
In February, OGE announced the sale of its stake in Enable Midstream Partners (ENBL), which is merging with Energy Transfer (ET).
The divestment should help stabilize OGE’s operating momentum and allow the company to focus exclusively on its electric utility in Oklahoma and Arkansas.
OGE shares have returned 6% including dividends in the past month and 24% over the past six months. Yet the stock trades at a reasonable 17 times trailing earnings, below the median of 20 for electric utilities in the S&P 1500 Index.
Although OGE earns a modest Quadrix Overall score of 51, both of its sector-specific scores exceed 80. Yielding 4.5%, OGE has grown its dividend at an annualized rate of 8% over the past five years.
Meanwhile, the shares of Entergy (ETR), Louisiana’s largest utility company, have fallen as a result of extensive outages following hurricane Ida. The utility provides power to 3 million customers in the Gulf region.
Entergy had recently spent $100 million upgrading the area’s electrical grid, boasting it was a model of “storm resiliency.” But Ida knocked out all eight transmission lines that connect to Entergy’s power plants in New Orleans.
A massive Entergy transmission tower, which had passed recent inspections, fell into the Mississippi River. The New Orleans City Council plans to investigate Entergy’s role in the outages.
Entergy’s stock has recovered much of the ground it initially lost following the hurricane and remains a member of our Top 15 Utilities model portfolio.
