After years of holding its dividend steady OGE Energy Corp. (OGE) has been steadily raising it over the last few years.
It currently yields a solid 2.9%.
Earnings estimates have been steadily rising as well, particularly for 2012. It is a Zacks #2 Rank (Buy).
Company Description
OGE Energy Corp. is a public utility holding company. Its principal subsidiary is Oklahoma Gas and Electric Company, which is engaged in the generation, transmission and distribution of electricity to retail and wholesale customers.
It also owns Enogex, which operates natural gas transmission and gathering pipelines.
Fourth Quarter Results
OGE Energy recently reported fourth quarter EPS of 31 cents, crushing the Zacks Consensus Estimate by 24%. It was down from 35 cents in the same quarter in 2010, however, due to higher operating expenses.
Operating revenues were up 7% year-over-year to $828.5 million. Electric utility revenues rose 5% as residential, commerical and industrial sales were strong.
Meanwhile, natural gas midstream operations revenues were up 9%.
Overall, gross profit expanded from 39.7% of revenues to 39.9% in the quarter. Operating income fell 3%, however, due to an 11% increase in operating revenues.
Outlook
Following strong fourth quarter results, management gave 2011 earnings guidance of $3.00 to $3.20 per share. The Zacks Consensus Estimate is within guidance at $3.15, a 5% increase over the same quarter in 2010.
Analysts expect solid double-digit EPS growth next year. The 2012 consensus estimate $3.61, representing 15% growth.
Estimates for 2012 have been rising sharply over the last several months as OGE has delivered three consecutive positive earnings surprises:
It is a Zacks #2 Rank (Buy).
Dividend
After years of holding its dividend steady, OGE has been consistently raising it since 2007:
It currently yields 2.9%.
Shares trade at 16.0x forward earnings, a premium to the industry average of 14.0x. Over the last 10 years, shares have traded at an average forward P/E of 14.7x.
OGE Energy Corp is headquartered in Oklahoma City, Oklahoma. It has a market cap of $4.9 billion.
Todd Bunton is the Growth & Income Stock Strategist for Zacks.com.
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