ONE Gas (OGS) and Southern Company Gas (GAS) Financial Contrast

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

Institutional and Insider Ownership

73.1% of ONE Gas shares are held by institutional investors. 1.5% of ONE Gas shares are held by 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.

Risk and Volatility

ONE Gas has a beta of 0.1, meaning that its share price is 90% less volatile than the S&P 500. Comparatively, Southern Company Gas has a beta of -0.08, meaning that its share price is 108% less volatile than the S&P 500.

Valuation & Earnings

This table compares ONE Gas and Southern Company Gas’ gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
ONE Gas $1.50 billion 2.68 $427.06 million $2.87 26.82
Southern Company Gas N/A N/A N/A N/A N/A

ONE Gas has higher revenue and earnings than Southern Company Gas.

Profitability

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

Net Margins Return on Equity Return on Assets
ONE Gas 10.12% 7.98% 3.14%
Southern Company Gas 6.84% 2.13% 0.90%

Dividends

ONE Gas pays an annual dividend of $1.68 per share and has a dividend yield of 2.2%. Southern Company Gas does not pay a dividend. ONE Gas pays out 58.5% of its earnings in the form of a dividend. Southern Company Gas has raised its dividend for 5 consecutive years.

Analyst Ratings

This is a summary of recent ratings and recommmendations for ONE Gas and Southern Company Gas, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
ONE Gas 2 2 0 0 1.50
Southern Company Gas 0 0 0 0 N/A

ONE Gas presently has a consensus target price of $64.00, suggesting a potential downside of 16.86%. Given ONE Gas’ higher probable upside, research analysts clearly believe ONE Gas is more favorable than Southern Company Gas.

Summary

ONE Gas beats Southern Company Gas on 9 of the 11 factors compared between the two stocks.

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.

Southern Company Gas Company Profile

Southern Company Gas, formerly AGL Resources Inc, is a natural gas-only distribution company. The Company operates in four operating segments: distribution operations, retail operations, wholesale services and midstream operations. The Company’s distribution operations segment is engaged in providing natural gas to residential, commercial and industrial customers. The retail operations segment is involved in the provision of natural gas commodity and related services. The wholesale services segment is engaged in natural gas storage, gas pipeline arbitrage and provides natural gas asset management and related logistics services for its utilities, as well as for non-affiliated companies. Midstream operations segment consists primarily of natural gas storage facilities and select pipelines, enabling the provision of diverse sources of natural gas supplies to its customers.

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