Analyzing RGC Resources (RGCO) and The Competition

RGC Resources (NASDAQ: RGCO) is one of 14 public companies in the “Natural Gas Distribution” industry, but how does it compare to its rivals? We will compare RGC Resources to similar companies based on the strength of its dividends, analyst recommendations, risk, earnings, institutional ownership, valuation and profitability.

Volatility and Risk

RGC Resources has a beta of -0.02, meaning that its share price is 102% less volatile than the S&P 500. Comparatively, RGC Resources’ rivals have a beta of 0.38, meaning that their average share price is 63% less volatile than the S&P 500.

Profitability

This table compares RGC Resources and its rivals’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
RGC Resources 9.73% 9.64% 3.16%
RGC Resources Competitors 4.79% -12.04% 3.92%

Institutional and Insider Ownership

65.6% of shares of all “Natural Gas Distribution” companies are owned by institutional investors. 8.9% of RGC Resources shares are owned by company insiders. Comparatively, 2.2% of shares of all “Natural Gas Distribution” companies are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Dividends

RGC Resources pays an annual dividend of $0.62 per share and has a dividend yield of 2.6%. RGC Resources pays out 74.7% of its earnings in the form of a dividend. As a group, “Natural Gas Distribution” companies pay a dividend yield of 2.8% and pay out 59.0% of their earnings in the form of a dividend. RGC Resources lags its rivals as a dividend stock, given its lower dividend yield and higher payout ratio.

Earnings & Valuation

This table compares RGC Resources and its rivals gross revenue, earnings per share and valuation.

Gross Revenue Net Income Price/Earnings Ratio
RGC Resources $62.30 million $6.23 million 28.28
RGC Resources Competitors $2.09 billion $171.32 million 19.08

RGC Resources’ rivals have higher revenue and earnings than RGC Resources. RGC Resources is trading at a higher price-to-earnings ratio than its rivals, indicating that it is currently more expensive than other companies in its industry.

Analyst Ratings

This is a breakdown of recent recommendations for RGC Resources and its rivals, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
RGC Resources 0 0 1 0 3.00
RGC Resources Competitors 66 226 244 6 2.35

RGC Resources currently has a consensus price target of $27.00, suggesting a potential upside of 15.04%. As a group, “Natural Gas Distribution” companies have a potential upside of 16.55%. Given RGC Resources’ rivals higher probable upside, analysts plainly believe RGC Resources has less favorable growth aspects than its rivals.

Summary

RGC Resources rivals beat RGC Resources on 9 of the 15 factors compared.

About RGC Resources

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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