ONE Gas (NYSE:OGS) & AltaGas (OTCMKTS:ATGFF) Critical Survey

AltaGas (OTCMKTS:ATGFF) 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 valuation, institutional ownership, analyst recommendations, profitability, earnings, dividends and risk.

Institutional & Insider Ownership

28.7% of AltaGas shares are held by institutional investors. Comparatively, 88.7% of ONE Gas shares are held by institutional investors. 0.9% of ONE Gas shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Analyst Recommendations

This is a summary of current ratings and price targets for AltaGas and ONE Gas, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
AltaGas	0	0	6	0	3.00
ONE Gas	0	6	6	0	2.50

ONE Gas has a consensus price target of $89.23, indicating a potential upside of 12.52%. Given ONE Gas’ higher probable upside, analysts plainly believe ONE Gas is more favorable than AltaGas.

Valuation and Earnings

This table compares AltaGas and ONE Gas”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
AltaGas	N/A	N/A	N/A	$1.10	35.16
ONE Gas	$2.43 billion	2.05	$264.22 million	$4.64	17.09

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
AltaGas	N/A	N/A	N/A
ONE Gas	12.47%	8.81%	3.45%

Dividends

AltaGas pays an annual dividend of $1.50 per share and has a dividend yield of 3.9%. ONE Gas pays an annual dividend of $2.72 per share and has a dividend yield of 3.4%. AltaGas pays out 136.8% 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 58.6% of its earnings in the form of a dividend. ONE Gas has increased its dividend for 2 consecutive years.

Summary

ONE Gas beats AltaGas on 10 of the 13 factors compared between the two stocks.

About AltaGas

AltaGas Ltd. operates as an energy infrastructure company in North America. The company operates through Utilities and Midstream segments. The Utilities segment owns and operates franchised, cost-of-service, rate-regulated natural gas distribution and storage utilities in Maryland, Virginia, Delaware, Pennsylvania, Ohio, and the District of Columbia serving approximately 1.6 million customers. This segment also provides interstate natural gas transportation and storage services. The Midstream segment engages in the natural gas gathering, processing, and extraction with 1.2 billion cubic feet per day (Bcf/d) of extraction processing capacity and approximately 1.2 Bcf/d of raw field gas processing capacity; fractionation and liquids handling business; and natural gas and natural gas liquids marketing activities. It also engages in LPG exports and distribution, logistics, trucking and rail terminals, and liquid storage businesses. In addition, the company operates gas-fired power generation and distribution assets with a generating capacity of 508 megawatt of power in California. It serves residential, commercial, and industrial customers. AltaGas Ltd. was founded in 1994 and is headquartered in Calgary, Canada.

About ONE Gas

ONE Gas, Inc., together with its subsidiaries, operates as a regulated natural gas distribution company in the United States. The company provides natural gas distribution services to approximately 2.3 million customers in Oklahoma, Kansas, and Texas. It serves residential, commercial, and transportation customers. The company was founded in 1906 and is headquartered in Tulsa, Oklahoma.