ONE Gas (NYSE: OGS) and Delta Natural Gas (NASDAQ:DGAS) are both utilities companies, but which is the superior business? We will compare the two companies based on the strength of their earnings, valuation, analyst recommendations, risk, dividends, profitabiliy and institutional ownership.

Valuation & Earnings

This table compares ONE Gas and Delta Natural Gas’ revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
ONE Gas $1.47 billion 2.63 $424.34 million $2.87 25.69
Delta Natural Gas $67.09 million 3.23 $20.21 million $0.89 34.20

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.

Risk & Volatility

ONE Gas has a beta of 0.12, suggesting that its stock price is 88% less volatile than the S&P 500. Comparatively, Delta Natural Gas has a beta of 0.56, suggesting that its stock price is 44% less volatile than the S&P 500.

Dividends

ONE Gas pays an annual dividend of $1.68 per share and has a dividend yield of 2.3%. Delta Natural Gas pays an annual dividend of $0.83 per share and has a dividend yield of 2.7%. ONE Gas pays out 58.5% of its earnings in the form of a dividend. 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.

Analyst Recommendations

This is a summary of current recommendations for ONE Gas and Delta Natural Gas, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
ONE Gas 2 3 0 0 1.60
Delta Natural Gas 0 0 0 0 N/A

ONE Gas currently has a consensus price target of $62.75, indicating a potential downside of 14.88%. Given ONE Gas’ higher possible upside, equities analysts plainly believe ONE Gas is more favorable than Delta Natural Gas.

Insider & Institutional Ownership

72.4% of ONE Gas shares are owned by institutional investors. Comparatively, 36.0% of Delta Natural Gas shares are owned by institutional investors. 1.3% of ONE Gas shares are owned by company insiders. Comparatively, 4.2% of Delta Natural Gas shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Profitability

This table compares ONE Gas and Delta Natural Gas’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
ONE Gas 10.12% 8.01% 3.14%
Delta Natural Gas 9.35% 8.08% 3.31%

ONE Gas Company Profile

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.

Delta Natural Gas Company Profile

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.

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