Comparing Delta Natural Gas (DGAS) & RGC Resources (RGCO)
Delta Natural Gas (NASDAQ: DGAS) and RGC Resources (NASDAQ:RGCO) are both small-cap utilities companies, but which is the superior investment? We will compare the two businesses based on the strength of their profitability, earnings, institutional ownership, valuation, risk, analyst recommendations and dividends.
Delta Natural Gas pays an annual dividend of $0.75 per share and has a dividend yield of 2.4%. RGC Resources pays an annual dividend of $0.62 per share and has a dividend yield of 2.5%. Delta Natural Gas pays out 97.4% 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 72.1% of its earnings in the form of a dividend. RGC Resources is clearly the better dividend stock, given its higher yield and lower payout ratio.
This is a summary of current recommendations and price targets for Delta Natural Gas and RGC Resources, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Delta Natural Gas||0||0||0||0||N/A|
RGC Resources has a consensus target price of $27.00, suggesting a potential upside of 8.48%. Given RGC Resources’ higher probable upside, analysts plainly believe RGC Resources is more favorable than Delta Natural Gas.
Institutional & Insider Ownership
36.8% of Delta Natural Gas shares are held by institutional investors. 4.2% of Delta Natural Gas shares are held by insiders. Comparatively, 8.9% 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 is poised for long-term growth.
Valuation & Earnings
This table compares Delta Natural Gas and RGC Resources’ top-line revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Delta Natural Gas||N/A||N/A||N/A||$0.77||39.86|
|RGC Resources||$62.30 million||2.90||$6.23 million||$0.86||28.94|
RGC Resources has higher revenue and earnings than Delta Natural Gas. RGC Resources is trading at a lower price-to-earnings ratio than Delta Natural Gas, indicating that it is currently the more affordable of the two stocks.
This table compares Delta Natural Gas and RGC Resources’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Delta Natural Gas||-3.88%||-2.51%||-1.03%|
RGC Resources beats Delta Natural Gas on 10 of the 12 factors compared between the two stocks.
Delta Natural Gas Company Profile
Delta Natural Gas Company, Inc. distributes or transports natural gas to approximately 36,000 customers. The Company’s segments include regulated segment and non-regulated segment. Through regulated segment, the Company distributes natural gas to its retail customers in approximately 23 rural counties. Its three service areas are Nicholasville, Corbin and Berea, Kentucky. The non-regulated segment includes the Company’s three subsidiaries, Delta Resources, Inc. and Delgasco, Inc. (Delgasco), which purchase natural gas in the open market, including natural gas from Kentucky producers, and Enpro, Inc. (Enpro), which produces natural gas that is sold to Delgasco for resale in the open market. The Company owns approximately 2,600 miles of natural gas gathering, transmission, distribution and storage lines. These lines range in size over 12 inches in diameter. It also holds leases for the storage of natural gas under approximately 8,000 acres located in Bell County, Kentucky.
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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