Mge Energy Inc (NASDAQ: MGEE)

Sector: Utilities Industry: Utilities - Regulated Electric CIK: 0001161728
Market Cap 2.85 Bn
P/B 3.67
P/E 29.23
P/S 5.07
ROIC (Qtr) 6.75
Div Yield % 2.10
Rev 1y % (Qtr) 4.27
Total Debt (Qtr) 841.44 Mn
Debt/Equity (Qtr) 0.65
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About

MGE Energy Inc., commonly known as MGE, operates in the regulated electric and gas utility industry, with its main business activities encompassing the generation, purchase, and distribution of electricity and natural gas to customers in south-central Wisconsin. The company has a rich history, having been established in 1896, and its operations span across various energy sources and customer segments. MGE generates electricity through a combination of coal-fired, gas-fired, and renewable energy sources. Its portfolio of electric generation facilities...

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Investment thesis

Bull case

  • Strong tangible asset base of 2.99B provides 3.55x coverage of total debt 841.44M, indicating robust asset backing and low credit risk.
  • Operating cash flow of 296.72M provides solid 1.38x coverage of current liabilities 215.11M, showing strong operational health.
  • Tangible assets of 2.99B provide robust 57.90x coverage of other current liabilities 51.66M, indicating strong asset backing.
  • Operating cash flow of 296.72M provides strong 4.36x coverage of inventory 68.13M, indicating efficient inventory management.
  • Operating cash flow of 296.72M provides strong 2.63x coverage of operating expenses 112.79M, showing operational efficiency.

Bear case

  • Operating cash flow of 296.72M barely covers its investment activities of (335.72M), with a coverage ratio of -0.88, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • With cash reserves of 10.14M against inventory of 68.13M, the 0.15 cash-to-inventory ratio suggests potential liquidity risks if inventory turnover slows, particularly concerning given current supply chain volatilities.
  • Operating cash flow of 296.72M provides thin coverage of dividend payments of (66.62M) with a -4.45 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Free cash flow of (31.77M) provides weak coverage of capital expenditures of 328.48M, with a -0.10 ratio suggesting additional external financing needs for growth initiatives.
  • Operating earnings of 187.26M show weak coverage of depreciation charges of 112.79M, with a 1.66 ratio indicating high capital intensity and potential reinvestment needs.

Segments Breakdown of Revenue (2024)

Consolidation Items Breakdown of Revenue (2024)

Peer comparison

Companies in the Utilities - Regulated Electric
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 NEE Nextera Energy Inc 191.44 Bn 28.01 6.98 95.62 Bn
2 SO Southern Co 97.42 Bn 30.98 4.46 73.75 Bn
3 AEP American Electric Power Co Inc 64.38 Bn 33.83 4.24 0.00 Bn
4 DUK Duke Energy CORP 56.47 Bn 30.61 3.87 89.65 Bn
5 EXC Exelon Corp 48.53 Bn 17.53 2.00 50.08 Bn
6 ETR Entergy Corp /De/ 45.74 Bn 25.29 3.59 30.45 Bn
7 PEG Public Service Enterprise Group Inc 43.93 Bn 35.35 4.41 23.51 Bn
8 XEL Xcel Energy Inc 41.10 Bn 37.21 3.75 35.52 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 1.05 1.01
EV to Cash from Ops. EV/CFO 23.97 12.45
EV to Debt EV to Debt 3.74 171.92
EV to EBIT EV/EBIT 22.65 19.12
EV to EBITDA EV/EBITDA 17.72 15.67
EV to Free Cash Flow [EV/FCF] EV/FCF 120.84 -28.25
EV to Market Cap EV to Market Cap 1.10 1.84
EV to Revenue EV/Rev 5.59 4.72
Price to Book Value [P/B] P/B 3.67 2.60
Price to Earnings [P/E] P/E 29.23 18.53
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 2.02 1.94
Dividend Payout Ratio % Div Payout % (Qtr) 49.30 62.23
Dividend per Basic Share Div per Share (Qtr) 1.83 2.02
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) -210.01 -218.37
Interest Coverage Int. cover (Qtr) 5.69 2.83
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -39.28 -68.90
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) -31.83 73.92
Dividend Growth (1y) % Div 1y % (Qtr) 5.37 4.05
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 10.61 15.47
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 11.97 13.33
EBIT Growth (1y) % EBIT 1y % (Qtr) 14.13 15.81
EBT Growth (1y) % EBT 1y % (Qtr) 17.09 19.29
EPS Growth (1y) % EPS 1y % (Qtr) 13.15 21.26
FCF Growth (1y) % FCF 1y % (Qtr) -281.29 -35.52
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 11.97 11.97
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.24 0.22
Cash Payout Ratio Cash Payout (Qtr) 0.11 0.11
Cash Ratio Cash Ratio (Qtr) 0.05 0.98
Current Ratio Curr Ratio (Qtr) 0.91 2.72
Debt to Equity Ratio Debt/Equity (Qtr) 0.65 1.45
Interest Cover Ratio Int Coverage (Qtr) 5.69 2.83
Times Interest Earned Times Interest Earned (Qtr) 5.69 2.83
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 41.40 37.94
EBIT Margin % EBIT Margin % (Qtr) 25.81 316.94
EBT Margin % EBT Margin % (Qtr) 21.27 14.36
Gross Margin % Gross Margin % (Qtr) 38.40 41.20
Net Profit Margin % Net Margin % (Qtr) 18.60 12.57