Southern Union (NYSE: SUG) and South Jersey Industries (NYSE:SJI) are both mid-cap natural gas distribution companies, but which is the superior business? We will compare the two companies based on the strength of their analyst recommendations, profitability, valuation, institutional ownership, earnings, dividends and risk.

Profitability

This table compares Southern Union and South Jersey Industries’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Southern Union N/A N/A N/A
South Jersey Industries 3.13% 7.06% 2.44%

Dividends

South Jersey Industries pays an annual dividend of $1.09 per share and has a dividend yield of 3.4%. Southern Union does not pay a dividend. South Jersey Industries pays out 227.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Risk & Volatility

Southern Union has a beta of 0.87, suggesting that its share price is 13% less volatile than the S&P 500. Comparatively, South Jersey Industries has a beta of 0.72, suggesting that its share price is 28% less volatile than the S&P 500.

Institutional & Insider Ownership

69.9% of South Jersey Industries shares are held by institutional investors. 0.6% of South Jersey Industries shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Analyst Recommendations

This is a summary of recent ratings and price targets for Southern Union and South Jersey Industries, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Southern Union 0 0 0 0 N/A
South Jersey Industries 0 4 3 0 2.43

South Jersey Industries has a consensus price target of $38.00, indicating a potential upside of 18.56%.

Earnings and Valuation

This table compares Southern Union and South Jersey Industries’ revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
Southern Union N/A N/A N/A $2.02 N/A
South Jersey Industries $1.04 billion 2.46 $118.81 million $0.48 66.77

South Jersey Industries has higher revenue and earnings than Southern Union. Southern Union is trading at a lower price-to-earnings ratio than South Jersey Industries, indicating that it is currently the more affordable of the two stocks.

Summary

South Jersey Industries beats Southern Union on 8 of the 11 factors compared between the two stocks.

About Southern Union

Southern Union Company (Southern Union) is engaged in the gathering, processing, transportation, storage and distribution of natural gas in the United States. The Company owns and operates assets in the regulated and unregulated natural gas industry. Southern Union operates in three segments: Transportation and Storage, which is engaged in the interstate transportation and storage of natural gas and provides liquefied natural gas (LNG) terminalling and re-gasification services; Gathering and Processing, which is engaged in the gathering, treating, processing and redelivery of natural gas and natural gas liquid (NGL) in Texas and New Mexico, and Distribution, which is engaged in the local distribution of natural gas in Missouri. Effective December 20, 2013, Algonquin Power & Utilities Corp. (APUC) announced that, Liberty Utilities, APUC’s regulated distribution utility, acquired the Massachusetts natural gas distribution utility assets (New England Gas Assets) of Southern Union Company.

About South Jersey Industries

South Jersey Industries, Inc. (SJI) is an energy services holding company. The Company provides a range of energy-related products and services, primarily through its subsidiaries. Its subsidiaries include South Jersey Gas Company (SJG), South Jersey Energy Company (SJE), South Jersey Resources Group, LLC (SJRG), South Jersey Exploration, LLC (SJEX), Marina Energy, LLC (Marina), South Jersey Energy Service Plus, LLC (SJESP) and SJI Midstream, LLC (Midstream). Its segments include Gas utility operations (SJG), which consist primarily of natural gas distribution; Wholesale energy operations, which include the activities of SJRG and SJEX; SJE, which is involved in both retail gas and retail electric activities; On-Site energy production, which consists of Marina’s thermal energy facility; Appliance service operations, which include SJESP, and Corporate and Services segment, which includes the activities of Midstream.

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