Critical Survey: Atmos Energy (NYSE:ATO) & Suburban Propane Partners (NYSE:SPH)

Suburban Propane Partners (NYSE:SPH) and Atmos Energy (NYSE:ATO) 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

30.9% of Suburban Propane Partners shares are held by institutional investors. Comparatively, 90.2% of Atmos Energy shares are held by institutional investors. 1.3% of Suburban Propane Partners shares are held by company insiders. Comparatively, 0.4% of Atmos Energy 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 Suburban Propane Partners and Atmos Energy, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Suburban Propane Partners	0	0	1	2	3.67
Atmos Energy	0	10	4	0	2.29

Atmos Energy has a consensus price target of $186.92, indicating a potential upside of 7.97%. Given Atmos Energy’s higher probable upside, analysts plainly believe Atmos Energy is more favorable than Suburban Propane Partners.

Earnings and Valuation

This table compares Suburban Propane Partners and Atmos Energy”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Suburban Propane Partners	$1.39 billion	0.89	$106.57 million	$1.99	9.39
Atmos Energy	$4.70 billion	6.14	$1.20 billion	$8.14	21.27

Atmos Energy has higher revenue and earnings than Suburban Propane Partners. Suburban Propane Partners is trading at a lower price-to-earnings ratio than Atmos Energy, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Suburban Propane Partners and Atmos Energy’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Suburban Propane Partners	9.57%	19.45%	5.39%
Atmos Energy	27.58%	9.59%	4.64%

Risk & Volatility

Suburban Propane Partners has a beta of 0.42, meaning that its share price is 58% less volatile than the S&P 500. Comparatively, Atmos Energy has a beta of 0.6, meaning that its share price is 40% less volatile than the S&P 500.

Dividends

Suburban Propane Partners pays an annual dividend of $1.30 per share and has a dividend yield of 7.0%. Atmos Energy pays an annual dividend of $4.00 per share and has a dividend yield of 2.3%. Suburban Propane Partners pays out 65.3% of its earnings in the form of a dividend. Atmos Energy pays out 49.1% 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. Atmos Energy has increased its dividend for 41 consecutive years.

Summary

Atmos Energy beats Suburban Propane Partners on 12 of the 18 factors compared between the two stocks.

About Suburban Propane Partners

Suburban Propane Partners, L.P., through its subsidiaries, engages in the retail marketing and distribution of propane, renewable propane, fuel oil, and refined fuels in the United States. The company operates through four segments: Propane, Fuel Oil and Refined Fuels, Natural Gas and Electricity, and All Other. The Propane segment is involved in the retail distribution of propane for space heating, water heating, cooking, and clothes drying for use as a motor fuel in internal combustion engines to power over-the-road vehicles, forklifts, and stationary engines, as well as to fire furnaces as a cutting gas to the industrial customers; and for tobacco curing, crop drying, poultry brooding, and weed control in the agricultural markets. It also engages in the wholesale distribution of propane to industrial end users. Its Fuel Oil and Refined Fuels segment engages in the retail distribution of fuel oil, diesel, kerosene, and gasoline to residential and commercial customers for use in primarily as a source of heat in homes and buildings. The Natural Gas and Electricity segment markets natural gas and electricity to residential and commercial customers in the deregulated energy markets in New York and Pennsylvania. The All Other segment sells, installs, and services a range of home comfort equipment, including whole-house heating products, air cleaners, humidifiers, and space heaters. The company serves residential, commercial, industrial, and agricultural customers primarily in the east and west coast regions of the United States, as well as portions of the Midwest region of the United States and Alaska. Suburban Propane Partners, L.P. was founded in 1945 and is based in Whippany, New Jersey.

About Atmos Energy

Atmos Energy Corporation, together with its subsidiaries, engages in the regulated natural gas distribution, and pipeline and storage businesses in the United States. It operates through two segments, Distribution, and Pipeline and Storage. The Distribution segment is involved in the regulated natural gas distribution and related sales operations in eight states. This segment distributes natural gas to approximately 3.3 million residential, commercial, public authority, and industrial customers; and owned 73,689 miles of underground distribution and transmission mains. The Pipeline and Storage segment engages in the pipeline and storage operations. This segment transports natural gas for third parties and manages five underground storage facilities in Texas; provides ancillary services customary to the pipeline industry, including parking arrangements, lending, and inventory sales; and owned 5,645 miles of gas transmission lines. Atmos Energy Corporation was founded in 1906 and is headquartered in Dallas, Texas.