Analyzing NewJersey Resources (NYSE:NJR) & ONE Gas (NYSE:OGS)

ONE Gas (NYSE:OGS) and NewJersey Resources (NYSE:NJR) are both mid-cap utilities companies, but which is the better business? We will contrast the two businesses based on the strength of their profitability, earnings, risk, dividends, analyst recommendations, institutional ownership and valuation.

Insider and Institutional Ownership

88.7% of ONE Gas shares are owned by institutional investors. Comparatively, 71.0% of NewJersey Resources shares are owned by institutional investors. 0.9% of ONE Gas shares are owned by company insiders. Comparatively, 0.7% of NewJersey Resources shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Profitability

This table compares ONE Gas and NewJersey Resources’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
ONE Gas	12.61%	8.80%	3.48%
NewJersey Resources	16.42%	14.46%	4.67%

Analyst Recommendations

This is a summary of recent ratings and recommmendations for ONE Gas and NewJersey Resources, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
ONE Gas	0	6	7	0	2.54
NewJersey Resources	0	2	4	1	2.86

ONE Gas presently has a consensus target price of $87.12, suggesting a potential upside of 6.27%. NewJersey Resources has a consensus target price of $62.50, suggesting a potential upside of 13.73%. Given NewJersey Resources’ stronger consensus rating and higher possible upside, analysts plainly believe NewJersey Resources is more favorable than ONE Gas.

Earnings and Valuation

This table compares ONE Gas and NewJersey Resources”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
ONE Gas	$2.32 billion	2.22	$264.22 million	$4.69	17.48
NewJersey Resources	$2.04 billion	2.74	$335.63 million	$3.62	15.18

NewJersey Resources has lower revenue, but higher earnings than ONE Gas. NewJersey Resources is trading at a lower price-to-earnings ratio than ONE Gas, indicating that it is currently the more affordable of the two stocks.

Volatility and Risk

ONE Gas has a beta of 0.62, suggesting that its stock price is 38% less volatile than the S&P 500. Comparatively, NewJersey Resources has a beta of 0.45, suggesting that its stock price is 55% less volatile than the S&P 500.

Dividends

ONE Gas pays an annual dividend of $2.72 per share and has a dividend yield of 3.3%. NewJersey Resources pays an annual dividend of $2.00 per share and has a dividend yield of 3.6%. ONE Gas pays out 58.0% of its earnings in the form of a dividend. NewJersey Resources pays out 55.2% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. ONE Gas has increased its dividend for 2 consecutive years and NewJersey Resources has increased its dividend for 29 consecutive years. NewJersey Resources is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

NewJersey Resources beats ONE Gas on 11 of the 18 factors compared between the two stocks.

About ONE Gas

ONE Gas, Inc., together with its subsidiaries, operates as a regulated natural gas distribution company in the United States. The company provides natural gas distribution services to approximately 2.3 million customers in Oklahoma, Kansas, and Texas. It serves residential, commercial, and transportation customers. The company was founded in 1906 and is headquartered in Tulsa, Oklahoma.

About NewJersey Resources

New Jersey Resources Corporation, an energy services holding company, distributes natural gas. The company operates through four segments: Natural Gas Distribution, Clean Energy Ventures, Energy Services, and Storage and Transportation. The Natural Gas Distribution segment offers regulated natural gas utility services to approximately 576,000 customers in Burlington, Middlesex, Monmouth, Morris, Ocean, and Sussex counties in New Jersey; provides capacity and storage management services; and participates in the off-system sales and capacity release markets. The Clean Energy Ventures segment invests in, owns, and operates clean energy projects, including commercial and residential solar installation situated in New Jersey, Rhode Island, New York, Connecticut, Michigan, and Indiana. The Energy Services segment maintains and operates natural gas transportation and storage capacity contracts, as well as provides physical wholesale energy, retail energy and energy management services in the United States and Canada. The Storage and Transportation segment invests in invests in energy-related ventures. It provides heating, ventilation, and cooling services; sales and installation of appliances; offers solar equipment installation, and plumbing repair and installation services; and holds commercial real estate properties. The company was incorporated in 1981 and is headquartered in Wall, New Jersey.