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

Institutional & Insider Ownership

36.4% of Delta Natural Gas shares are held by institutional investors. 4.2% of Delta Natural Gas shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Risk and Volatility

Delta Natural Gas has a beta of 0.56, meaning that its stock price is 44% less volatile than the S&P 500. Comparatively, Southern Company Gas has a beta of -0.08, meaning that its stock price is 108% less volatile than the S&P 500.

Analyst Ratings

This is a summary of recent recommendations and price targets for Delta Natural Gas and Southern Company Gas, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Delta Natural Gas 0 0 0 0 N/A
Southern Company Gas 0 1 0 0 2.00

Profitability

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

Net Margins Return on Equity Return on Assets
Delta Natural Gas 9.35% 8.08% 3.31%
Southern Company Gas 15.32% 10.45% 4.40%

Dividends

Delta Natural Gas pays an annual dividend of $0.83 per share and has a dividend yield of 2.7%. Southern Company Gas does not pay a dividend. Delta Natural Gas pays out 93.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Delta Natural Gas has raised its dividend for 5 consecutive years.

Valuation and Earnings

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

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Delta Natural Gas $67.09 million 3.25 $20.21 million $0.89 34.34
Southern Company Gas N/A N/A N/A N/A N/A

Delta Natural Gas has higher revenue and earnings than Southern Company Gas.

Summary

Delta Natural Gas beats Southern Company Gas on 6 of the 10 factors compared between the two stocks.

Delta Natural Gas Company Profile

Delta Natural Gas Company, Inc. distributes or transports natural gas to approximately 36,000 customers. The Company’s segments include regulated segment and non-regulated segment. Through regulated segment, the Company distributes natural gas to its retail customers in approximately 23 rural counties. Its three service areas are Nicholasville, Corbin and Berea, Kentucky. The non-regulated segment includes the Company’s three subsidiaries, Delta Resources, Inc. and Delgasco, Inc. (Delgasco), which purchase natural gas in the open market, including natural gas from Kentucky producers, and Enpro, Inc. (Enpro), which produces natural gas that is sold to Delgasco for resale in the open market. The Company owns approximately 2,600 miles of natural gas gathering, transmission, distribution and storage lines. These lines range in size over 12 inches in diameter. It also holds leases for the storage of natural gas under approximately 8,000 acres located in Bell County, Kentucky.

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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