The excitement of investing in a company that can reverse its fortunes is a big draw for some speculators, so even companies that have no revenue, no profit, and a record of falling short, can manage to find investors. But the reality is that when a company loses money each year, for long enough, its investors will usually take their share of those losses. Loss making companies can act like a sponge for capital - so investors should be cautious that they're not throwing good money after bad.

If this kind of company isn't your style, you like companies that generate revenue, and even earn profits, then you may well be interested in MGE Energy (NASDAQ:MGEE). While profit isn't the sole metric that should be considered when investing, it's worth recognising businesses that can consistently produce it.

We've found 21 US stocks that are forecast to pay a dividend yield of over 6% next year. See the full list for free.

How Quickly Is MGE Energy Increasing Earnings Per Share?

If a company can keep growing earnings per share (EPS) long enough, its share price should eventually follow. Therefore, there are plenty of investors who like to buy shares in companies that are growing EPS. We can see that in the last three years MGE Energy grew its EPS by 6.5% per year. This may not be setting the world alight, but it does show that EPS is on the upwards trend.

Careful consideration of revenue growth and earnings before interest and taxation (EBIT) margins can help inform a view on the sustainability of the recent profit growth. MGE Energy maintained stable EBIT margins over the last year, all while growing revenue 6.1% to US$688m. That's progress.

The chart below shows how the company's bottom and top lines have progressed over time. To see the actual numbers, click on the chart.NasdaqGS:MGEE Earnings and Revenue History May 9th 2025

See our latest analysis for MGE Energy

You don't drive with your eyes on the rear-view mirror, so you might be more interested in this freereport showing analyst forecasts for MGE Energy's future profits.

Are MGE Energy Insiders Aligned With All Shareholders?

It's said that there's no smoke without fire. For investors, insider buying is often the smoke that indicates which stocks could set the market alight. Because often, the purchase of stock is a sign that the buyer views it as undervalued. However, insiders are sometimes wrong, and we don't know the exact thinking behind their acquisitions.

Belief in the company remains high for insiders as there hasn't been a single share sold by the management or company board members. But the real excitement comes from the US$80k that Independent Director James Berbee spent buying shares (at an average price of about US$88.47). It seems at least one insider has seen potential in the company's future - and they're willing to put money on the line.

Story Continues

It's commendable to see that insiders have been buying shares in MGE Energy, but there is more evidence of shareholder friendly management. Specifically, the CEO is paid quite reasonably for a company of this size. The median total compensation for CEOs of companies similar in size to MGE Energy, with market caps between US$2.0b and US$6.4b, is around US$7.6m.

The MGE Energy CEO received total compensation of just US$2.1m in the year to December 2024. First impressions seem to indicate a compensation policy that is favourable to shareholders. CEO compensation is hardly the most important aspect of a company to consider, but when it's reasonable, that gives a little more confidence that leadership are looking out for shareholder interests. It can also be a sign of good governance, more generally.

Is MGE Energy Worth Keeping An Eye On?

One important encouraging feature of MGE Energy is that it is growing profits. And there's more to MGE Energy, with the insider buying and modest CEO pay being a great look for those with an eye on the company. All things considered, MGE Energy is certainly displaying its merits and is worthy of taking research to the next step. However, before you get too excited we've discovered 2 warning signs for MGE Energy that you should be aware of.

The good news is that MGE Energy is not the only stock with insider buying. Here's  a list of small cap, undervalued companies in the US with insider buying in the last three months!

Please note the insider transactions discussed in this article refer to reportable transactions in the relevant jurisdiction.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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