Critical Review: UGI (NYSE:UGI) & Towngas Smart Energy (OTCMKTS:TGASF)

UGI (NYSE:UGI) and Towngas Smart Energy (OTCMKTS:TGASF) are both utilities companies, but which is the superior business? We will contrast the two companies based on the strength of their profitability, earnings, analyst recommendations, institutional ownership, dividends, valuation and risk.

Institutional & Insider Ownership

82.3% of UGI shares are owned by institutional investors. Comparatively, 12.3% of Towngas Smart Energy shares are owned by institutional investors. 0.6% of UGI shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Profitability

This table compares UGI and Towngas Smart Energy’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
UGI	9.20%	12.80%	4.15%
Towngas Smart Energy	N/A	N/A	N/A

Dividends

UGI pays an annual dividend of $1.50 per share and has a dividend yield of 4.2%. Towngas Smart Energy pays an annual dividend of $0.08 per share and has a dividend yield of 18.7%. UGI pays out 50.2% of its earnings in the form of a dividend. Towngas Smart Energy pays out 20.1% 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. UGI has increased its dividend for 37 consecutive years. Towngas Smart Energy is clearly the better dividend stock, given its higher yield and lower payout ratio.

Earnings and Valuation

This table compares UGI and Towngas Smart Energy”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
UGI	$7.29 billion	1.04	$678.00 million	$2.99	11.83
Towngas Smart Energy	N/A	N/A	N/A	$0.40	1.08

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

Analyst Recommendations

This is a summary of current ratings and target prices for UGI and Towngas Smart Energy, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
UGI	1	2	3	0	2.33
Towngas Smart Energy	0	0	0	0	0.00

UGI currently has a consensus target price of $42.00, suggesting a potential upside of 18.70%. Given UGI’s stronger consensus rating and higher probable upside, equities research analysts plainly believe UGI is more favorable than Towngas Smart Energy.

Summary

UGI beats Towngas Smart Energy on 12 of the 14 factors compared between the two stocks.

About UGI

UGI Corporation, together with its subsidiaries, distributes, stores, transports, and markets energy products and related services in the United States and internationally. The company operates through four segments: AmeriGas Propane, UGI International, Midstream & Marketing, and UGI Utilities. It distributes propane to approximately 1.3 million residential, commercial/industrial, motor fuel, agricultural, and wholesale customers through 1,400 propane distribution locations. The company distributes liquefied petroleum gases (LPG) to residential, commercial, industrial, agricultural, wholesale and automobile fuel customers; and provides logistics, storage, and other services to third-party LPG distributors. In addition, it engages in the retail sale of natural gas, liquid fuels, and electricity to approximately 12,400 residential, commercial, and industrial customers at 42,000 locations. Further, the company distributes natural gas to approximately 677,000 customers in eastern and central Pennsylvania counties through its distribution system of approximately 12,500 miles of gas mains; and supplies electricity to approximately 62,600 customers in northeastern Pennsylvania through 2,560 miles of lines and 14 substations. Additionally, it operates electric generation facilities, which include coal-fired, landfill gas-fueled, solar-powered, and natural gas-fueled facilities; a natural gas liquefaction, storage, and vaporization facility; propane storage and propane-air mixing stations; and rail transshipment terminals. It manages natural gas pipeline and storage contracts; develops, owns, and operates pipelines, gathering infrastructure, and gas storage facilities. UGI Corporation was incorporated in 1882 and is headquartered in King of Prussia, Pennsylvania.

About Towngas Smart Energy

Towngas Smart Energy Company Limited, an investment holding company, sells and distributes piped gas in the People's Republic of China. The company operates through three segments, Sales and Distribution of Piped Gas and Related Products; Gas Connection; and Extended Business. It engages in the provision of natural gas and related services; construction of gas pipelines; sale of gas related household appliances; and other value-added services. The company also offers financing and engineering works services, smart energy solutions, and upstream and midstream services; and operates vehicle gas refilling stations. The company was formerly known as Towngas China Company Limited and changed its name to Towngas Smart Energy Company Limited in December 2021. The company was founded in 1998 and is headquartered in North Point, Hong Kong. Towngas Smart Energy Company Limited is a subsidiary of The Hong Kong and China Gas Company Limited.