Southern Union (SUG) and ONE Gas (OGS) Head-To-Head Comparison

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

Risk and Volatility

Southern Union has a beta of 0.87, meaning that its share price is 13% less volatile than the S&P 500. Comparatively, ONE Gas has a beta of 0.08, meaning that its share price is 92% less volatile than the S&P 500.

Institutional and Insider Ownership

72.8% of ONE Gas shares are owned by institutional investors. 1.5% of ONE Gas shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Profitability

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

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

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 56.4% of its earnings in the form of a dividend.

Analyst Recommendations

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

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Southern Union 0 0 0 0 N/A
ONE Gas 2 0 0 0 1.00

ONE Gas has a consensus target price of $68.50, suggesting a potential downside of 10.43%.

Valuation & Earnings

This table compares Southern Union and ONE Gas’ gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Southern Union N/A N/A N/A $2.02 N/A
ONE Gas $1.43 billion 2.80 $140.09 million $2.98 25.66

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.

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.

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.

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