Critical Survey: ONE Gas (NYSE:OGS) vs. Snam (OTCMKTS:SNMRF)

Snam (OTCMKTS:SNMRF) and ONE Gas (NYSE:OGS) are both utilities companies, but which is the superior stock? We will compare the two businesses based on the strength of their risk, earnings, analyst recommendations, institutional ownership, profitability, dividends and valuation.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Snam	N/A	N/A	N/A
ONE Gas	12.47%	8.81%	3.45%

Analyst Recommendations

This is a summary of recent recommendations for Snam and ONE Gas, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Snam	2	2	1	0	1.80
ONE Gas	0	6	6	0	2.50

ONE Gas has a consensus target price of $89.23, indicating a potential upside of 11.76%. Given ONE Gas’ stronger consensus rating and higher probable upside, analysts clearly believe ONE Gas is more favorable than Snam.

Dividends

Snam pays an annual dividend of $0.20 per share and has a dividend yield of 3.2%. ONE Gas pays an annual dividend of $2.72 per share and has a dividend yield of 3.4%. Snam pays out 61.1% of its earnings in the form of a dividend. ONE Gas pays out 58.6% 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. ONE Gas has raised its dividend for 2 consecutive years. ONE Gas is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Institutional & Insider Ownership

22.6% of Snam shares are owned by institutional investors. Comparatively, 88.7% of ONE Gas shares are owned by institutional investors. 0.9% of ONE Gas shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Valuation and Earnings

This table compares Snam and ONE Gas”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	19.00
ONE Gas	$2.43 billion	2.07	$264.22 million	$4.64	17.21

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

Summary

ONE Gas beats Snam on 13 of the 14 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 ONE Gas

ONE Gas, Inc., together with its subsidiaries, operates as a regulated natural gas distribution company in the United States. The company provides natural gas distribution services to approximately 2.3 million customers in Oklahoma, Kansas, and Texas. It serves residential, commercial, and transportation customers. The company was founded in 1906 and is headquartered in Tulsa, Oklahoma.