UGI (NYSE: UGI) and ONE Gas (NYSE:OGS) are both mid-cap utilities companies, but which is the superior investment? We will contrast the two companies based on the strength of their earnings, dividends, profitability, institutional ownership, analyst recommendations, risk and valuation.

Insider & Institutional Ownership

77.1% of UGI shares are held by institutional investors. Comparatively, 72.8% of ONE Gas shares are held by institutional investors. 2.2% of UGI shares are held by company insiders. Comparatively, 1.5% of ONE Gas shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Analyst Recommendations

This is a breakdown of current ratings and price targets for UGI and ONE Gas, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
UGI 1 1 1 0 2.00
ONE Gas 2 1 0 0 1.33

UGI presently has a consensus price target of $46.50, suggesting a potential downside of 6.33%. ONE Gas has a consensus price target of $65.33, suggesting a potential downside of 15.64%. Given UGI’s stronger consensus rating and higher probable upside, research analysts clearly believe UGI is more favorable than ONE Gas.

Valuation and Earnings

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

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
UGI $6.12 billion 1.40 $436.60 million $2.46 20.18
ONE Gas $1.43 billion 2.84 $140.09 million $2.99 25.90

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

Dividends

UGI pays an annual dividend of $1.00 per share and has a dividend yield of 2.0%. ONE Gas pays an annual dividend of $1.68 per share and has a dividend yield of 2.2%. UGI pays out 40.7% of its earnings in the form of a dividend. ONE Gas pays out 56.2% 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. UGI has raised its dividend for 31 consecutive years.

Volatility and Risk

UGI has a beta of 0.68, indicating that its share price is 32% less volatile than the S&P 500. Comparatively, ONE Gas has a beta of 0.11, indicating that its share price is 89% less volatile than the S&P 500.

Profitability

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

Net Margins Return on Equity Return on Assets
UGI 7.13% 10.65% 3.57%
ONE Gas 10.42% 8.22% 3.22%

Summary

UGI beats ONE Gas on 12 of the 17 factors compared between the two stocks.

UGI Company Profile

UGI Corporation is a holding company. The Company distributes, stores, transports and markets energy products and related services. It operates through six segments. The AmeriGas Propane segment consists of the propane distribution business of AmeriGas Partners, L.P. The UGI France segment consists of the French LPG distribution business of its subsidiaries, Antargaz, Finagaz and its liquefied petroleum gases (LPG) distribution businesses. The Flaga & Other segment consists of the LPG distribution businesses of Flaga GmbH, AvantiGas Limited and ChinaGas Partners, L.P. The Energy Services segment consists of energy-related businesses conducted by its subsidiary, UGI Energy Services, LLC (Energy Services). The Electric Generation segment consists of electric generation facilities conducted by Energy Services’ subsidiary. The Gas Utility segment consists of the regulated natural gas distribution businesses of its subsidiary, UGI Utilities, Inc.

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.

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