Delta Natural Gas (NASDAQ: DGAS) and RGC Resources (NASDAQ:RGCO) are both small-cap utilities companies, but which is the superior business? We will contrast the two companies based on the strength of their dividends, institutional ownership, valuation, earnings, analyst recommendations, risk and profitability.
This is a summary of recent recommendations for Delta Natural Gas and RGC Resources, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Delta Natural Gas||0||0||0||0||N/A|
This table compares Delta Natural Gas and RGC Resources’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Delta Natural Gas||-3.88%||-2.51%||-1.03%|
Delta Natural Gas pays an annual dividend of $0.75 per share and has a dividend yield of 2.4%. RGC Resources pays an annual dividend of $0.62 per share and has a dividend yield of 2.4%. Delta Natural Gas pays out 97.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. RGC Resources pays out 74.7% of its earnings in the form of a dividend. RGC Resources is clearly the better dividend stock, given its higher yield and lower payout ratio.
Earnings and Valuation
This table compares Delta Natural Gas and RGC Resources’ gross revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Delta Natural Gas||N/A||N/A||N/A||$0.77||39.86|
|RGC Resources||$62.30 million||3.25||$6.23 million||$0.83||30.54|
RGC Resources has higher revenue and earnings than Delta Natural Gas. RGC Resources is trading at a lower price-to-earnings ratio than Delta Natural Gas, indicating that it is currently the more affordable of the two stocks.
Institutional & Insider Ownership
36.8% of Delta Natural Gas shares are owned by institutional investors. 4.2% of Delta Natural Gas shares are owned by insiders. Comparatively, 8.9% of RGC Resources shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.
RGC Resources beats Delta Natural Gas on 10 of the 12 factors compared between the two stocks.
About Delta Natural Gas
Delta Natural Gas Company, Inc. distributes or transports natural gas to approximately 36,000 customers. The Company’s segments include regulated segment and non-regulated segment. Through regulated segment, the Company distributes natural gas to its retail customers in approximately 23 rural counties. Its three service areas are Nicholasville, Corbin and Berea, Kentucky. The non-regulated segment includes the Company’s three subsidiaries, Delta Resources, Inc. and Delgasco, Inc. (Delgasco), which purchase natural gas in the open market, including natural gas from Kentucky producers, and Enpro, Inc. (Enpro), which produces natural gas that is sold to Delgasco for resale in the open market. The Company owns approximately 2,600 miles of natural gas gathering, transmission, distribution and storage lines. These lines range in size over 12 inches in diameter. It also holds leases for the storage of natural gas under approximately 8,000 acres located in Bell County, Kentucky.
About RGC Resources
RGC Resources, Inc., through its subsidiaries, operates as an energy services company. The company sells and distributes natural gas to residential, commercial, and industrial customers in Roanoke, Virginia, and the surrounding localities. It also provides various unregulated services. The company operates approximately 1,135 miles of transmission and distribution pipeline; and a liquefied natural gas storage facility located in Botetourt County, as well as owns and operates 8 metering stations. RGC Resources, Inc. was founded in 1912 and is based in Roanoke, Virginia.
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