| Valuation method | Value, $ | Upside, % |
|---|---|---|
| Artificial intelligence (AI) | 55.10 | -31 |
| Intrinsic value (DCF) | 35.61 | -55 |
| Graham-Dodd Method | 24.28 | -70 |
| Graham Formula | 20.70 | -74 |
MGE Energy, Inc. (NASDAQ: MGEE) is a leading public utility holding company primarily serving Wisconsin through its regulated electric and gas utility operations. Headquartered in Madison, Wisconsin, MGE Energy generates, purchases, and distributes electricity to approximately 159,000 customers in Dane County, while supplying natural gas to 169,000 customers across seven Wisconsin counties. The company operates a diversified energy portfolio, including coal-fired, gas-fired, and renewable energy sources, alongside strategic transmission investments. As a key player in the Diversified Utilities sector, MGE Energy emphasizes reliability, sustainability, and regulatory compliance, positioning itself as a stable regional utility provider. With a market capitalization of approximately $3.29 billion, MGE Energy plays a critical role in Wisconsin's energy infrastructure, balancing traditional and renewable energy solutions to meet growing demand.
MGE Energy presents a stable investment opportunity within the utility sector, supported by its regulated operations, consistent dividend payouts (currently $1.7775 per share), and a low beta (0.792), indicating lower volatility relative to the broader market. The company's revenue of $676.9 million and net income of $120.6 million in the latest fiscal year reflect steady performance. However, risks include regulatory pressures, exposure to fossil fuel generation, and capital-intensive infrastructure needs. Investors seeking defensive exposure to utilities with a regional focus may find MGE Energy attractive, but growth prospects are tempered by its limited geographic diversification and reliance on regulatory approvals for rate adjustments.
MGE Energy's competitive advantage lies in its regulated utility status, which provides predictable cash flows and a monopolistic position in its service territories. The company's integration of renewable energy sources aligns with broader industry trends toward decarbonization, though its reliance on coal-fired generation remains a regulatory and reputational risk. Compared to larger national utilities, MGE Energy's smaller scale limits its ability to achieve economies of scale but allows for more localized customer service and operational agility. Its transmission investments enhance grid reliability, a critical factor in maintaining customer retention and regulatory goodwill. However, the company faces competition from alternative energy providers and community solar initiatives, which could erode its customer base over time. MGE Energy's focus on Wisconsin provides regional stability but exposes it to state-specific regulatory and economic conditions.