NewJersey Resources Corporation (NYSE: NJR) and Southwest Gas Corporation (NYSE:SWX) are both mid-cap utilities companies, but which is the better business? We will contrast the two businesses based on the strength of their risk, profitability, analyst recommendations, institutional ownership, earnings, valuation and dividends.

Analyst Ratings

This is a summary of current ratings and recommmendations for NewJersey Resources Corporation and Southwest Gas Corporation, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
NewJersey Resources Corporation 1 1 2 0 2.25
Southwest Gas Corporation 0 3 0 0 2.00

NewJersey Resources Corporation presently has a consensus price target of $39.75, suggesting a potential downside of 4.56%. Southwest Gas Corporation has a consensus price target of $79.00, suggesting a potential upside of 1.15%. Given Southwest Gas Corporation’s higher probable upside, analysts clearly believe Southwest Gas Corporation is more favorable than NewJersey Resources Corporation.

Dividends

NewJersey Resources Corporation pays an annual dividend of $1.09 per share and has a dividend yield of 2.6%. Southwest Gas Corporation pays an annual dividend of $1.98 per share and has a dividend yield of 2.5%. NewJersey Resources Corporation pays out 48.9% of its earnings in the form of a dividend. Southwest Gas Corporation pays out 61.1% 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. NewJersey Resources Corporation has increased its dividend for 5 consecutive years and Southwest Gas Corporation has increased its dividend for 21 consecutive years. NewJersey Resources Corporation is clearly the better dividend stock, given its higher yield and lower payout ratio.

Valuation and Earnings

This table compares NewJersey Resources Corporation and Southwest Gas Corporation’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
NewJersey Resources Corporation $2.20 billion 1.64 $321.77 million $2.23 18.68
Southwest Gas Corporation $2.40 billion 1.55 $568.17 million $3.24 24.10

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

Institutional and Insider Ownership

64.0% of NewJersey Resources Corporation shares are owned by institutional investors. Comparatively, 76.8% of Southwest Gas Corporation shares are owned by institutional investors. 1.5% of NewJersey Resources Corporation shares are owned by company insiders. Comparatively, 1.0% of Southwest Gas Corporation shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Profitability

This table compares NewJersey Resources Corporation and Southwest Gas Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
NewJersey Resources Corporation 8.81% 12.77% 4.10%
Southwest Gas Corporation 6.46% 9.09% 2.73%

Volatility & Risk

NewJersey Resources Corporation has a beta of 0.47, suggesting that its share price is 53% less volatile than the S&P 500. Comparatively, Southwest Gas Corporation has a beta of 0.62, suggesting that its share price is 38% less volatile than the S&P 500.

Summary

NewJersey Resources Corporation beats Southwest Gas Corporation on 9 of the 17 factors compared between the two stocks.

NewJersey Resources Corporation Company Profile

New Jersey Resources Corporation is an energy services holding company. The Company’s business is the distribution of natural gas through a regulated utility, which provides other retail and wholesale energy services to customers and investing in clean energy projects and midstream assets. It operates in four business segments: Natural Gas Distribution, Clean Energy Ventures, Energy Services and Midstream. The Natural Gas Distribution segment consists of regulated natural gas services, off-system sales, capacity and storage management operations. The Energy Services segment consists of unregulated wholesale energy operations. The Clean Energy Ventures segment consists of capital investments in clean energy projects. The Midstream segment consists of investments in the midstream natural gas market, such as natural gas transportation and storage facilities. The Home Services and Other operations consist of heating, cooling and water appliance sales and installations, among others.

Southwest Gas Corporation Company Profile

Southwest Gas Holdings, Inc., formerly Southwest Gas Corporation, is engaged in the business of purchasing, distributing and transporting natural gas. The Company operates through two segments: natural gas operations and construction services, which includes the operations of the Company’s subsidiary, Centuri Construction Group, Inc. (Centuri). The Company operates two pipeline transmission systems, such as a system, which includes a liquefied natural gas (LNG) storage facility owned by Paiute extending from the Idaho-Nevada border to the Reno, Sparks, and Carson City areas and communities in the Lake Tahoe area in both California and Nevada and other communities in northern and western Nevada, and a system extending from the Colorado River at the southern tip of Nevada to the Las Vegas distribution area.

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