ONE Gas (NYSE: OGS) and Southern Union (NYSE:SUG) are both mid-cap utilities companies, but which is the superior business? We will compare the two companies based on the strength of their valuation, dividends, analyst recommendations, risk, profitability, institutional ownership and earnings.

Analyst Ratings

This is a breakdown of current recommendations and price targets for ONE Gas and Southern Union, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
ONE Gas 2 2 0 0 1.50
Southern Union 0 0 0 0 N/A

ONE Gas currently has a consensus target price of $64.00, suggesting a potential downside of 17.68%.

Volatility and Risk

ONE Gas has a beta of 0.11, suggesting that its stock price is 89% less volatile than the S&P 500. Comparatively, Southern Union has a beta of 0.87, suggesting that its stock price is 13% 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 2.2%. Southern Union does not pay a dividend. ONE Gas pays out 56.2% of its earnings in the form of a dividend.

Profitability

This table compares ONE Gas and Southern Union’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
ONE Gas 10.42% 8.22% 3.22%
Southern Union N/A N/A N/A

Institutional and Insider Ownership

72.8% of ONE Gas shares are held by institutional investors. 1.5% of ONE Gas shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Valuation and Earnings

This table compares ONE Gas and Southern Union’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
ONE Gas $1.43 billion 2.85 $140.09 million $2.99 26.00
Southern Union N/A N/A N/A $2.02 N/A

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

Summary

ONE Gas beats Southern Union on 8 of the 10 factors compared between the two stocks.

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.

Southern Union Company Profile

Southern Union Company (Southern Union) is engaged in the gathering, processing, transportation, storage and distribution of natural gas in the United States. The Company owns and operates assets in the regulated and unregulated natural gas industry. Southern Union operates in three segments: Transportation and Storage, which is engaged in the interstate transportation and storage of natural gas and provides liquefied natural gas (LNG) terminalling and re-gasification services; Gathering and Processing, which is engaged in the gathering, treating, processing and redelivery of natural gas and natural gas liquid (NGL) in Texas and New Mexico, and Distribution, which is engaged in the local distribution of natural gas in Missouri. Effective December 20, 2013, Algonquin Power & Utilities Corp. (APUC) announced that, Liberty Utilities, APUC’s regulated distribution utility, acquired the Massachusetts natural gas distribution utility assets (New England Gas Assets) of Southern Union Company.

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