Questar (NYSE: STR) and Atmos Energy Corporation (NYSE:ATO) are both utilities companies, but which is the superior business? We will contrast the two businesses based on the strength of their earnings, valuation, dividends, profitability, analyst recommendations, institutional ownership and risk.

Profitability

This table compares Questar and Atmos Energy Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Questar 19.01% 9.76% 3.19%
Atmos Energy Corporation N/A 10.59% 3.80%

Analyst Recommendations

This is a breakdown of current ratings and price targets for Questar and Atmos Energy Corporation, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Questar 0 1 0 0 2.00
Atmos Energy Corporation 1 0 3 0 2.50

Questar currently has a consensus target price of $25.00, indicating a potential downside of 0.24%. Atmos Energy Corporation has a consensus target price of $87.50, indicating a potential downside of 1.03%. Given Questar’s higher possible upside, analysts clearly believe Questar is more favorable than Atmos Energy Corporation.

Dividends

Questar pays an annual dividend of $0.88 per share and has a dividend yield of 3.5%. Atmos Energy Corporation pays an annual dividend of $1.80 per share and has a dividend yield of 2.0%. Questar pays out 79.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Atmos Energy Corporation pays out 48.1% of its earnings in the form of a dividend. Questar has raised its dividend for 37 consecutive years and Atmos Energy Corporation has raised its dividend for 34 consecutive years. Questar is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Valuation and Earnings

This table compares Questar and Atmos Energy Corporation’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Questar N/A N/A N/A $1.11 22.58
Atmos Energy Corporation $3.62 billion 2.59 $1.04 billion $3.74 23.64

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

Risk and Volatility

Questar has a beta of 0.51, indicating that its stock price is 49% less volatile than the S&P 500. Comparatively, Atmos Energy Corporation has a beta of 0.39, indicating that its stock price is 61% less volatile than the S&P 500.

Insider and Institutional Ownership

78.9% of Questar shares are owned by institutional investors. Comparatively, 71.0% of Atmos Energy Corporation shares are owned by institutional investors. 0.4% of Questar shares are owned by insiders. Comparatively, 1.6% of Atmos Energy Corporation shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Summary

Atmos Energy Corporation beats Questar on 8 of the 14 factors compared between the two stocks.

Questar Company Profile

Dominion Questar Corp, formerly Questar Corporation, is an integrated natural gas holding company. The Company, through its subsidiaries is principally engaged in three lines of business, which include Questar Gas Company (Questar Gas), which provides retail natural gas distribution in Utah, Wyoming and Idaho; Wexpro Company (Wexpro), which develops and produces natural gas from cost-of-service reserves for Questar Gas customers, and Questar Pipeline Company, which operates interstate natural gas pipelines and storage facilities in the western the United States and provides other energy services. The Company is also engaged in Corporate and Other operations, which include Questar Fueling Company (Questar Fueling) that builds, owns and operates compressed natural gas (CNG) fueling stations for fleet operators with medium- and heavy-duty trucks and tractors. Questar Gas distributes gas to customers along the Wasatch Front, Provo, Salt Lake, Ogden and other areas in Utah.

Atmos Energy Corporation Company Profile

Atmos Energy Corporation is engaged primarily in the regulated natural gas distribution and pipeline businesses, as well as other nonregulated natural gas businesses. The Company operates through three segments: regulated distribution segment, which includes its regulated distribution and related sales operations; regulated pipeline segment, which includes the pipeline and storage operations of its Atmos Pipeline-Texas Division, and nonregulated segment, which includes its nonregulated natural gas management, nonregulated natural gas transmission, storage and other services. The Company’s nonregulated businesses provide natural gas management, marketing, transportation and storage services to municipalities, local gas distribution companies, including certain of its natural gas distribution divisions and industrial customers principally in the Midwest and Southeast.

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