Questar (NYSE: STR) and WGL Holdings (NYSE:WGL) are both utilities companies, but which is the superior investment? We will compare the two businesses based on the strength of their dividends, valuation, earnings, analyst recommendations, institutional ownership, profitability and risk.

Risk & Volatility

Questar has a beta of 0.51, indicating that its share price is 49% less volatile than the S&P 500. Comparatively, WGL Holdings has a beta of 0.68, indicating that its share price is 32% less volatile than the S&P 500.

Profitability

This table compares Questar and WGL Holdings’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Questar 19.01% 9.76% 3.19%
WGL Holdings 7.60% 11.76% 2.73%

Analyst Recommendations

This is a breakdown of current ratings and price targets for Questar and WGL Holdings, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Questar 0 0 0 0 N/A
WGL Holdings 0 4 0 0 2.00

WGL Holdings has a consensus price target of $71.00, suggesting a potential downside of 16.22%. Given WGL Holdings’ higher probable upside, analysts clearly believe WGL Holdings is more favorable than Questar.

Earnings & Valuation

This table compares Questar and WGL Holdings’ top-line revenue, earnings per share 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
WGL Holdings $2.39 billion 1.82 $465.84 million $3.51 24.15

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

Insider and Institutional Ownership

78.9% of Questar shares are held by institutional investors. Comparatively, 69.1% of WGL Holdings shares are held by institutional investors. 0.4% of Questar shares are held by insiders. Comparatively, 1.0% of WGL Holdings shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Dividends

Questar pays an annual dividend of $0.88 per share and has a dividend yield of 3.5%. WGL Holdings pays an annual dividend of $2.04 per share and has a dividend yield of 2.4%. 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. WGL Holdings pays out 58.1% of its earnings in the form of a dividend. Questar has increased its dividend for 37 consecutive years and WGL Holdings has increased its dividend for 40 consecutive years.

Summary

WGL Holdings beats Questar on 8 of the 12 factors compared between the two stocks.

About Questar

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.

About WGL Holdings

WGL Holdings, Inc. (WGL) is a holding company. The Company operates through four segments. The Regulated Utility segment consists of Washington Gas Light Company, which provides regulated gas distribution services to end use customers and natural gas transportation services to an unaffiliated natural gas distribution company and Hampshire Gas Company, which provides regulated interstate natural gas storage services. The Retail Energy-Marketing segment consists of the operations of WGL Energy Services, Inc., which sells natural gas and electricity directly to retail customers. The Commercial Energy Systems segment consists of the operations of WGL Energy Systems, Inc., WGSW, Inc. and the results of operations of affiliate-owned commercial distributed energy projects. The Midstream Energy Services segment consists of the operations of WGL Midstream, Inc., which engages in acquiring, investing in, managing and optimizing natural gas storage and transportation assets.

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