Southern Union (NYSE: SUG) and ONE Gas (NYSE:OGS) are both mid-cap natural gas distribution companies, but which is the superior stock? We will compare the two businesses based on the strength of their risk, valuation, institutional ownership, earnings, profitability, dividends and analyst recommendations.
Insider & Institutional 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 large money managers, endowments and hedge funds believe a company is poised for long-term growth.
This is a breakdown of recent 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|
ONE Gas has a consensus target price of $64.00, indicating a potential downside of 17.01%.
Valuation & Earnings
This table compares Southern Union and ONE Gas’ revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||NetIncome||Earnings Per Share||Price/Earnings Ratio|
|ONE Gas||$1.43 billion||2.82||$140.09 million||$2.99||25.79|
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.
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|
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.
Risk and Volatility
Southern Union has a beta of 0.87, meaning that its stock price is 13% less volatile than the S&P 500. Comparatively, ONE Gas has a beta of 0.11, meaning that its stock price is 89% less volatile than the S&P 500.
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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