Head-To-Head Review: South Jersey Industries (SJI) vs. RGC Resources (RGCO)

South Jersey Industries (NYSE: SJI) and RGC Resources (NASDAQ:RGCO) are both utilities companies, but which is the better business? We will compare the two businesses based on the strength of their profitability, dividends, institutional ownership, earnings, valuation, risk and analyst recommendations.

Volatility & Risk

South Jersey Industries has a beta of 0.58, indicating that its share price is 42% less volatile than the S&P 500. Comparatively, RGC Resources has a beta of -0.02, indicating that its share price is 102% less volatile than the S&P 500.

Profitability

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

Net Margins Return on Equity Return on Assets
South Jersey Industries 3.13% 7.16% 2.44%
RGC Resources 9.73% 9.64% 3.16%

Valuation & Earnings

This table compares South Jersey Industries and RGC Resources’ revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
South Jersey Industries $1.04 billion 2.10 $118.81 million $0.48 57.04
RGC Resources $62.30 million 2.74 $6.23 million $0.83 28.28

South Jersey Industries has higher revenue and earnings than RGC Resources. RGC Resources 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.

Institutional & Insider Ownership

69.5% of South Jersey Industries shares are owned by institutional investors. 0.6% of South Jersey Industries shares are owned by insiders. Comparatively, 8.9% of RGC Resources shares are owned by 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.

Dividends

South Jersey Industries pays an annual dividend of $1.12 per share and has a dividend yield of 4.1%. RGC Resources pays an annual dividend of $0.62 per share and has a dividend yield of 2.6%. South Jersey Industries pays out 233.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. RGC Resources pays out 74.7% of its earnings in the form of a dividend.

Analyst Recommendations

This is a summary of recent recommendations for South Jersey Industries and RGC Resources, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
South Jersey Industries 0 5 2 0 2.29
RGC Resources 0 0 1 0 3.00

South Jersey Industries presently has a consensus target price of $35.17, indicating a potential upside of 28.44%. RGC Resources has a consensus target price of $27.00, indicating a potential upside of 15.04%. Given South Jersey Industries’ higher probable upside, equities research analysts clearly believe South Jersey Industries is more favorable than RGC Resources.

South Jersey Industries Company Profile

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.

RGC Resources Company Profile

RGC Resources, Inc. (Resources) is an energy services company. The Company is engaged in the regulated sale and distribution of natural gas to residential, commercial and industrial customers in Roanoke, Virginia, and the surrounding localities, through its Roanoke Gas Company (Roanoke Gas) subsidiary. Roanoke Gas also provides certain non-regulated services. It maintains an integrated natural gas distribution system to deliver natural gas purchased from suppliers to residential, commercial and industrial users in its service territory. As of September 30, 2016, Resources had approximately 1,132 miles of transmission and distribution pipeline. As of September 30, 2016, Roanoke Gas owned and operated eight metering stations. It also owns a liquefied natural gas storage facility located in Botetourt County that has the capacity to store up to 220,000 dekatherm (DTH) of natural gas. The Company’s subsidiaries also include Diversified Energy Company and RGC Midstream, LLC.

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