Snam (OTCMKTS:SNMRF) versus NewJersey Resources (NYSE:NJR) Critical Analysis

Snam (OTCMKTS:SNMRF) and NewJersey Resources (NYSE:NJR) are both utilities companies, but which is the better investment? We will contrast the two businesses based on the strength of their dividends, profitability, institutional ownership, earnings, valuation, risk and analyst recommendations.

Earnings and Valuation

This table compares Snam and NewJersey Resources”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Snam	N/A	N/A	N/A	$0.33	20.11
NewJersey Resources	$2.04 billion	2.75	$335.63 million	$3.62	15.22

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

Insider & Institutional Ownership

22.6% of Snam shares are held by institutional investors. Comparatively, 71.0% of NewJersey Resources shares are held by institutional investors. 0.7% of NewJersey Resources shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Dividends

Snam pays an annual dividend of $0.20 per share and has a dividend yield of 3.0%. NewJersey Resources pays an annual dividend of $1.90 per share and has a dividend yield of 3.4%. Snam pays out 61.1% of its earnings in the form of a dividend. NewJersey Resources pays out 52.5% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. NewJersey Resources has raised its dividend for 29 consecutive years. NewJersey Resources is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Ratings

This is a summary of recent ratings for Snam and NewJersey Resources, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Snam	2	2	1	0	1.80
NewJersey Resources	0	1	3	1	3.00

NewJersey Resources has a consensus price target of $57.83, indicating a potential upside of 4.96%. Given NewJersey Resources’ stronger consensus rating and higher probable upside, analysts clearly believe NewJersey Resources is more favorable than Snam.

Profitability

This table compares Snam and NewJersey Resources’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Snam	N/A	N/A	N/A
NewJersey Resources	16.42%	14.46%	4.67%

Summary

NewJersey Resources beats Snam on 14 of the 15 factors compared between the two stocks.

About Snam

Snam S.p.A., together with its subsidiaries, engages in the operation of natural gas transport and storage infrastructure. The company operates through Transportation, Storage, Regasification, Energy Transition, and other segments. It provides natural gas transportation and dispatching services; and owns and manages liquified natural gas (LNG) regasification plants. The company also offers natural gas storage services through an integrated group of infrastructure comprising deposits, wells, gas treatment and compression plants, and the operational dispatching systems; and operates storage concessions located in Lombardy, Emilia-Romagna, and Abruzzo. In addition, it provides energy efficiency solutions for companies, condominiums, tertiary, and public administration sectors; and invests, constructs, develops, and operates biogas and biomethane plants. Further, the company offers engineering support and consulting services in technical and specialized fields; and sells automotive compressed natural gas (CNG) compressors. It operates a natural gas transportation network of approximately 38,000 kilometers in Italy, Austria, Tunisia, Egypt, the United Arab Emirates, France, Greece, and the United Kingdom. The company was formerly known as Snam Rete Gas S.p.A. and changed its name to Snam S.p.A. in January 2012. Snam S.p.A. was founded in 1941 and is headquartered in San Donato Milanese, Italy.

About NewJersey Resources

New Jersey Resources Corporation, an energy services holding company, distributes natural gas. The company operates through four segments: Natural Gas Distribution, Clean Energy Ventures, Energy Services, and Storage and Transportation. The Natural Gas Distribution segment offers regulated natural gas utility services to approximately 576,000 customers in Burlington, Middlesex, Monmouth, Morris, Ocean, and Sussex counties in New Jersey; provides capacity and storage management services; and participates in the off-system sales and capacity release markets. The Clean Energy Ventures segment invests in, owns, and operates clean energy projects, including commercial and residential solar installation situated in New Jersey, Rhode Island, New York, Connecticut, Michigan, and Indiana. The Energy Services segment maintains and operates natural gas transportation and storage capacity contracts, as well as provides physical wholesale energy, retail energy and energy management services in the United States and Canada. The Storage and Transportation segment invests in invests in energy-related ventures. It provides heating, ventilation, and cooling services; sales and installation of appliances; offers solar equipment installation, and plumbing repair and installation services; and holds commercial real estate properties. The company was incorporated in 1981 and is headquartered in Wall, New Jersey.