Delta Natural Gas (NASDAQ: DGAS) and ONE Gas (NYSE:OGS) are both utilities companies, but which is the superior investment? We will compare the two businesses based on the strength of their risk, earnings, profitabiliy, dividends, analyst recommendations, valuation and institutional ownership.
This table compares Delta Natural Gas and ONE Gas’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Delta Natural Gas||9.35%||8.08%||3.31%|
Institutional and Insider Ownership
35.8% of Delta Natural Gas shares are owned by institutional investors. Comparatively, 72.6% of ONE Gas shares are owned by institutional investors. 4.2% of Delta Natural Gas shares are owned by insiders. Comparatively, 1.3% of ONE Gas shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.
Risk & Volatility
Delta Natural Gas has a beta of 0.56, indicating that its share price is 44% less volatile than the S&P 500. Comparatively, ONE Gas has a beta of 0.12, indicating that its share price is 88% less volatile than the S&P 500.
Delta Natural Gas pays an annual dividend of $0.83 per share and has a dividend yield of 2.7%. ONE Gas pays an annual dividend of $1.68 per share and has a dividend yield of 2.3%. Delta Natural Gas pays out 93.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. ONE Gas pays out 58.5% of its earnings in the form of a dividend.
Earnings and Valuation
This table compares Delta Natural Gas and ONE Gas’ top-line revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Delta Natural Gas||$67.09 million||3.24||$20.21 million||$0.89||34.25|
|ONE Gas||$1.50 billion||2.58||$427.06 million||$2.87||25.78|
ONE Gas has higher revenue and earnings than Delta Natural Gas. ONE Gas 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.
This is a summary of recent ratings and price targets for Delta Natural Gas and ONE Gas, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Delta Natural Gas||0||0||0||0||N/A|
ONE Gas has a consensus price target of $62.75, indicating a potential downside of 15.19%. Given ONE Gas’ higher possible upside, analysts clearly believe ONE Gas is more favorable than Delta Natural Gas.
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 ONE Gas
ONE Gas, Inc. is a regulated natural gas distribution utility in the United States. The Company provides natural gas distribution services. The Company distributes natural gas in Oklahoma, Kansas and Texas. The Company serves residential, commercial and industrial, transportation and wholesale and public authority customers. The Company’s natural gas distribution markets in terms of customers are Oklahoma City and Tulsa, Oklahoma; Kansas City, Wichita and Topeka, Kansas, and Austin and El Paso, Texas. As of December 31, 2016, its three divisions, Oklahoma Natural Gas, Kansas Gas Service and Texas Gas Service, distribute natural gas to approximately 88%, 72% and 13% of the natural gas distribution customers in Oklahoma, Kansas and Texas, respectively. As of December 31, 2016, the Company had 50.4 billion cubic feet (Bcf) of natural gas storage capacity under lease with remaining terms ranging from 1 to 10 years and maximum allowable daily withdrawal capacity of approximately 1.3 Bcf.
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