ONE Gas (NYSE: OGS) and Questar (NYSE:STR) are both utilities companies, but which is the better business? We will compare the two companies based on the strength of their dividends, analyst recommendations, profitabiliy, earnings, risk, institutional ownership and valuation.

Profitability

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

Net Margins Return on Equity Return on Assets
ONE Gas 10.33% 8.02% 3.17%
Questar 17.15% 16.86% 5.32%

Risk & Volatility

ONE Gas has a beta of 0.11, meaning that its share price is 89% less volatile than the S&P 500. Comparatively, Questar has a beta of 0.51, meaning that its share price is 49% less volatile than the S&P 500.

Analyst Ratings

This is a summary of recent ratings and target prices for ONE Gas and Questar, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
ONE Gas 2 4 0 0 1.67
Questar 0 1 0 0 2.00

ONE Gas currently has a consensus price target of $62.75, suggesting a potential downside of 12.48%. Questar has a consensus price target of $25.00, suggesting a potential downside of 0.24%. Given Questar’s stronger consensus rating and higher possible upside, analysts clearly believe Questar is more favorable than ONE Gas.

Dividends

ONE Gas pays an annual dividend of $1.68 per share and has a dividend yield of 2.3%. Questar pays an annual dividend of $0.88 per share and has a dividend yield of 3.5%. ONE Gas pays out 58.7% of its earnings in the form of a dividend. Questar pays out 79.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. ONE Gas has increased its dividend for 37 consecutive years.

Insider and Institutional Ownership

73.5% of ONE Gas shares are held by institutional investors. Comparatively, 78.9% of Questar shares are held by institutional investors. 1.3% of ONE Gas shares are held by company insiders. Comparatively, 0.4% of Questar shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Earnings & Valuation

This table compares ONE Gas and Questar’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
ONE Gas $1.47 billion 2.56 $424.34 million $2.86 25.07
Questar N/A N/A N/A $1.11 22.58

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

Summary

Questar beats ONE Gas on 8 of the 13 factors compared between the two stocks.

About ONE Gas

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.

About Questar

Dominion Questar Corp, formerly Questar Corporation, is an integrated natural gas holding company. The Company, through its subsidiaries is principally engaged in three lines of business, which include Questar Gas Company (Questar Gas), which provides retail natural gas distribution in Utah, Wyoming and Idaho; Wexpro Company (Wexpro), which develops and produces natural gas from cost-of-service reserves for Questar Gas customers, and Questar Pipeline Company, which operates interstate natural gas pipelines and storage facilities in the western the United States and provides other energy services. The Company is also engaged in Corporate and Other operations, which include Questar Fueling Company (Questar Fueling) that builds, owns and operates compressed natural gas (CNG) fueling stations for fleet operators with medium- and heavy-duty trucks and tractors. Questar Gas distributes gas to customers along the Wasatch Front, Provo, Salt Lake, Ogden and other areas in Utah.

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