UGI (NYSE: UGI) and RGC Resources (NASDAQ:RGCO) are both utilities companies, but which is the superior business? We will compare the two businesses based on the strength of their valuation, earnings, dividends, risk, profitability, analyst recommendations and institutional ownership.
Valuation and Earnings
This table compares UGI and RGC Resources’ revenue, earnings per share (EPS) and valuation.
||Earnings Per Share
UGI has higher revenue and earnings than RGC Resources. UGI is trading at a lower price-to-earnings ratio than RGC Resources, indicating that it is currently the more affordable of the two stocks.
UGI pays an annual dividend of $1.00 per share and has a dividend yield of 2.3%. RGC Resources pays an annual dividend of $0.62 per share and has a dividend yield of 2.4%. UGI pays out 31.0% of its earnings in the form of a dividend. RGC Resources pays out 72.1% 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. RGC Resources has increased its dividend for 32 consecutive years. RGC Resources is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
This is a breakdown of current ratings and price targets for UGI and RGC Resources, as reported by MarketBeat.com.
||Strong Buy Ratings
UGI presently has a consensus target price of $46.50, indicating a potential upside of 5.85%. RGC Resources has a consensus target price of $27.00, indicating a potential upside of 4.33%. Given UGI’s higher probable upside, analysts plainly believe UGI is more favorable than RGC Resources.
Insider and Institutional Ownership
78.2% of UGI shares are held by institutional investors. 2.4% of UGI shares are held by company insiders. Comparatively, 8.9% of RGC Resources shares are held by company 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.
Risk and Volatility
UGI has a beta of 0.62, indicating that its stock price is 38% less volatile than the S&P 500. Comparatively, RGC Resources has a beta of -0.03, indicating that its stock price is 103% less volatile than the S&P 500.
This table compares UGI and RGC Resources’ net margins, return on equity and return on assets.
||Return on Equity
||Return on Assets
UGI beats RGC Resources on 9 of the 16 factors compared between the two stocks.
UGI Company Profile
UGI Corporation is a holding company. The Company distributes, stores, transports and markets energy products and related services. It operates through six segments. The AmeriGas Propane segment consists of the propane distribution business of AmeriGas Partners, L.P. The UGI France segment consists of the French LPG distribution business of its subsidiaries, Antargaz, Finagaz and its liquefied petroleum gases (LPG) distribution businesses. The Flaga & Other segment consists of the LPG distribution businesses of Flaga GmbH, AvantiGas Limited and ChinaGas Partners, L.P. The Energy Services segment consists of energy-related businesses conducted by its subsidiary, UGI Energy Services, LLC (Energy Services). The Electric Generation segment consists of electric generation facilities conducted by Energy Services’ subsidiary. The Gas Utility segment consists of the regulated natural gas distribution businesses of its subsidiary, UGI Utilities, Inc.
RGC Resources Company Profile
RGC Resources, Inc. (Resources) is an energy services company. The Company is engaged in the regulated sale and distribution of natural gas to residential, commercial and industrial customers in Roanoke, Virginia, and the surrounding localities, through its Roanoke Gas Company (Roanoke Gas) subsidiary. Roanoke Gas also provides certain non-regulated services. It maintains an integrated natural gas distribution system to deliver natural gas purchased from suppliers to residential, commercial and industrial users in its service territory. As of September 30, 2016, Resources had approximately 1,132 miles of transmission and distribution pipeline. As of September 30, 2016, Roanoke Gas owned and operated eight metering stations. It also owns a liquefied natural gas storage facility located in Botetourt County that has the capacity to store up to 220,000 dekatherm (DTH) of natural gas. The Company’s subsidiaries also include Diversified Energy Company and RGC Midstream, LLC.
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