RGC Resources (NASDAQ: RGCO) and South Jersey Industries (NYSE:SJI) are both oils/energy companies, but which is the superior business? We will compare the two companies based on the strength of their dividends, earnings, institutional ownership, risk, profitability, valuation and analyst recommendations.
Insider & Institutional Ownership
70.6% of South Jersey Industries shares are held by institutional investors. 8.9% of RGC Resources shares are held by company insiders. Comparatively, 0.6% of South Jersey Industries shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.
This table compares RGC Resources and South Jersey Industries’ revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|RGC Resources||$62.30 million||3.11||$6.23 million||$0.83||32.14|
|South Jersey Industries||$1.24 billion||1.79||-$3.49 million||($0.05)||-557.80|
RGC Resources has higher earnings, but lower revenue than South Jersey Industries. South Jersey Industries is trading at a lower price-to-earnings ratio than RGC Resources, indicating that it is currently the more affordable of the two stocks.
This table compares RGC Resources and South Jersey Industries’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|South Jersey Industries||-0.28%||7.84%||2.60%|
This is a breakdown of current recommendations for RGC Resources and South Jersey Industries, as reported by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|South Jersey Industries||0||5||2||0||2.29|
RGC Resources currently has a consensus price target of $27.00, suggesting a potential upside of 1.20%. South Jersey Industries has a consensus price target of $34.00, suggesting a potential upside of 21.91%. Given South Jersey Industries’ higher possible upside, analysts clearly believe South Jersey Industries is more favorable than RGC Resources.
RGC Resources pays an annual dividend of $0.62 per share and has a dividend yield of 2.3%. South Jersey Industries pays an annual dividend of $1.12 per share and has a dividend yield of 4.0%. RGC Resources pays out 74.7% of its earnings in the form of a dividend. South Jersey Industries pays out -2,240.0% 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. South Jersey Industries is clearly the better dividend stock, given its higher yield and lower payout ratio.
Risk and Volatility
RGC Resources has a beta of -0.03, meaning that its share price is 103% less volatile than the S&P 500. Comparatively, South Jersey Industries has a beta of 0.67, meaning that its share price is 33% less volatile than the S&P 500.
RGC Resources beats South Jersey Industries on 9 of the 16 factors compared between the two stocks.
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.
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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