Analyzing Spire (NYSE:SR) & RGC Resources (NASDAQ:RGCO)

Spire (NYSE:SR) and RGC Resources (NASDAQ:RGCO) are both utilities companies, but which is the better investment? We will contrast the two companies based on the strength of their dividends, institutional ownership, analyst recommendations, valuation, profitability, earnings and risk.

Risk & Volatility

Spire has a beta of 0.5, indicating that its share price is 50% less volatile than the S&P 500. Comparatively, RGC Resources has a beta of 0.51, indicating that its share price is 49% less volatile than the S&P 500.

Insider and Institutional Ownership

87.4% of Spire shares are held by institutional investors. Comparatively, 35.8% of RGC Resources shares are held by institutional investors. 2.3% of Spire shares are held by insiders. Comparatively, 7.2% of RGC Resources shares are held by 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.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Spire	21.48%	8.65%	2.21%
RGC Resources	13.05%	11.73%	4.15%

Valuation & Earnings

This table compares Spire and RGC Resources”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Spire	$2.48 billion	2.13	$271.70 million	$8.97	9.96
RGC Resources	$95.33 million	2.48	$13.28 million	$1.34	16.94

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

Dividends

Spire pays an annual dividend of $3.30 per share and has a dividend yield of 3.7%. RGC Resources pays an annual dividend of $0.87 per share and has a dividend yield of 3.8%. Spire pays out 36.8% of its earnings in the form of a dividend. RGC Resources pays out 64.9% 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. Spire has increased its dividend for 22 consecutive years and RGC Resources has increased its dividend for 22 consecutive years.

Analyst Ratings

This is a summary of current ratings and price targets for Spire and RGC Resources, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Spire	0	5	7	1	2.69
RGC Resources	0	0	2	0	3.00

Spire currently has a consensus target price of $92.91, suggesting a potential upside of 3.94%. RGC Resources has a consensus target price of $27.00, suggesting a potential upside of 18.94%. Given RGC Resources’ stronger consensus rating and higher probable upside, analysts clearly believe RGC Resources is more favorable than Spire.

Summary

Spire beats RGC Resources on 9 of the 17 factors compared between the two stocks.

About Spire

Spire Inc. is a natural gas utility holding company that distributes natural gas to residential, commercial and industrial customers. Its regulated utility operations serve customers in Missouri, Alabama and Mississippi. In addition to its utility businesses, Spire operates natural gas marketing and midstream businesses. These activities include marketing natural gas and developing and operating infrastructure that supports its delivery. The company traces its roots to Laclede Gas, founded in St. Louis in 1857.

About RGC Resources

RGC Resources, Inc. is a holding company whose principal subsidiary, Roanoke Gas Company, provides natural gas distribution services. Roanoke Gas delivers natural gas to residential, commercial, and industrial customers through a regulated utility network. The company serves customers in and around Roanoke, Virginia, including communities in the Roanoke Valley and surrounding areas. Its operations include the distribution, sale, and related service of natural gas, as well as the maintenance and expansion of the infrastructure used to deliver it.