Head-To-Head Review: RGC Resources (NASDAQ:RGCO) and Valero Energy (NYSE:VLO)

RGC Resources (NASDAQ:RGCO) and Valero Energy (NYSE:VLO) are both energy companies, but which is the superior stock? We will contrast the two companies based on the strength of their earnings, profitability, analyst recommendations, dividends, risk, valuation and institutional ownership.

Insider and Institutional Ownership

35.8% of RGC Resources shares are owned by institutional investors. Comparatively, 78.7% of Valero Energy shares are owned by institutional investors. 6.6% of RGC Resources shares are owned by company insiders. Comparatively, 0.0% of Valero Energy shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Volatility and Risk

RGC Resources has a beta of 0.49, suggesting that its stock price is 51% less volatile than the S&P 500. Comparatively, Valero Energy has a beta of 1.05, suggesting that its stock price is 5% more volatile than the S&P 500.

Profitability

This table compares RGC Resources and Valero Energy’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
RGC Resources	14.48%	12.01%	4.17%
Valero Energy	0.62%	5.76%	2.62%

Earnings and Valuation

This table compares RGC Resources and Valero Energy”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
RGC Resources	$84.64 million	2.61	$11.76 million	$1.31	16.34
Valero Energy	$129.88 billion	0.39	$2.77 billion	$2.40	67.14

Valero Energy has higher revenue and earnings than RGC Resources. RGC Resources is trading at a lower price-to-earnings ratio than Valero Energy, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a breakdown of recent recommendations for RGC Resources and Valero Energy, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
RGC Resources	0	0	1	0	3.00
Valero Energy	0	6	10	2	2.78

Valero Energy has a consensus price target of $169.80, suggesting a potential upside of 5.38%. Given Valero Energy’s higher possible upside, analysts plainly believe Valero Energy is more favorable than RGC Resources.

Dividends

RGC Resources pays an annual dividend of $0.83 per share and has a dividend yield of 3.9%. Valero Energy pays an annual dividend of $4.52 per share and has a dividend yield of 2.8%. RGC Resources pays out 63.4% of its earnings in the form of a dividend. Valero Energy pays out 188.3% 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 has raised its dividend for 22 consecutive years and Valero Energy has raised its dividend for 4 consecutive years. RGC Resources is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

About RGC Resources

RGC Resources, Inc., through its subsidiaries, operates as an energy services company. It sells and distributes natural gas to residential, commercial, and industrial customers in Roanoke, Virginia, and the surrounding localities. The company also provides various unregulated services. It operates approximately 1,179 miles of transmission and distribution pipeline; and a liquefied natural gas storage facility, as well as owns and operates six metering stations. In addition, it produces biogas. RGC Resources, Inc. was founded in 1883 and is based in Roanoke, Virginia.

About Valero Energy

Valero Energy Corporation manufactures, markets, and sells petroleum-based and low-carbon liquid transportation fuels and petrochemical products in the United States, Canada, the United Kingdom, Ireland, Latin America, Mexico, Peru, and internationally. It operates through three segments: Refining, Renewable Diesel, and Ethanol. The company produces California Reformulated Gasoline Blendstock for Oxygenate Blending and Conventional Blendstock for Oxygenate Blending gasolines, CARB diesel, diesel, jet fuel, heating oil, and asphalt; feedstocks; aromatics; sulfur and residual fuel oil; intermediate oils; and sulfur, sweet, and sour crude oils. It sells its refined products through wholesale rack and bulk markets; and through outlets under the Valero, Beacon, Diamond Shamrock, Shamrock, Ultramar, and Texaco brands. The company owns and operates renewable diesel and ethanol plants, as well as produces renewable diesel and naphtha under the Diamond Green Diesel brand name. In addition, it offers ethanol and various co-products, including dry distiller grains, syrup, and inedible distillers corn oil to animal feed customers. The company was formerly known as Valero Refining and Marketing Company and changed its name to Valero Energy Corporation in August 1997. Valero Energy Corporation was founded in 1980 and is headquartered in San Antonio, Texas.