Contrasting National Fuel Gas (NYSE:NFG) and RGC Resources (NASDAQ:RGCO)

RGC Resources (NASDAQ:RGCO) and National Fuel Gas (NYSE:NFG) are both utilities companies, but which is the superior investment? We will compare the two businesses based on the strength of their analyst recommendations, dividends, profitability, valuation, earnings, institutional ownership and risk.

Dividends

RGC Resources pays an annual dividend of $0.87 per share and has a dividend yield of 4.0%. National Fuel Gas pays an annual dividend of $2.22 per share and has a dividend yield of 2.7%. RGC Resources pays out 64.9% of its earnings in the form of a dividend. National Fuel Gas pays out 30.8% 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. RGC Resources has raised its dividend for 22 consecutive years and National Fuel Gas has raised its dividend for 55 consecutive years.

Valuation & Earnings

This table compares RGC Resources and National Fuel Gas”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
RGC Resources	$107.14 million	2.14	$13.28 million	$1.34	16.43
National Fuel Gas	$2.28 billion	3.44	$518.50 million	$7.20	11.45

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

Volatility and Risk

RGC Resources has a beta of 0.51, suggesting that its share price is 49% less volatile than the S&P 500. Comparatively, National Fuel Gas has a beta of 0.37, suggesting that its share price is 63% less volatile than the S&P 500.

Profitability

This table compares RGC Resources and National Fuel Gas’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
RGC Resources	13.05%	11.73%	4.15%
National Fuel Gas	26.97%	19.04%	7.33%

Institutional & Insider Ownership

35.8% of RGC Resources shares are held by institutional investors. Comparatively, 74.0% of National Fuel Gas shares are held by institutional investors. 7.2% of RGC Resources shares are held by insiders. Comparatively, 1.3% of National Fuel Gas shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Analyst Ratings

This is a breakdown of current ratings and recommmendations for RGC Resources and National Fuel Gas, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
RGC Resources	0	0	1	0	3.00
National Fuel Gas	0	2	1	1	2.75

National Fuel Gas has a consensus price target of $105.50, indicating a potential upside of 27.93%. Given National Fuel Gas’ higher probable upside, analysts plainly believe National Fuel Gas is more favorable than RGC Resources.

Summary

National Fuel Gas beats RGC Resources on 12 of the 17 factors compared between the two stocks.

About RGC Resources

RGC Resources, Inc., through its subsidiaries, operates as an energy services company. It sells and distributes natural gas to residential, commercial, and industrial customers in Roanoke, Virginia, and the surrounding localities. The company also provides various unregulated services. It operates approximately 1,179 miles of transmission and distribution pipeline; and a liquefied natural gas storage facility, as well as owns and operates six metering stations. In addition, it produces biogas. RGC Resources, Inc. was founded in 1883 and is based in Roanoke, Virginia.

About National Fuel Gas

National Fuel Gas Company operates as a diversified energy company. It operates through four segments: Exploration and Production, Pipeline and Storage, Gathering, and Utility. The Exploration and Production segment explores for, develops, and produces natural gas and oil. The Pipeline and Storage segment provides interstate natural gas transportation services through an integrated gas pipeline system in Pennsylvania and New York; and owns and operates underground natural gas storage fields. This segment also transports natural gas for National Fuel Gas Distribution Corporation, as well as for other utilities, industrial companies, and power producers in New York State. The Gathering segment builds, owns, and operates natural gas processing and pipeline gathering facilities in the Appalachian region, as well as provides gathering services to Seneca. The Utility segment sells natural gas or provides natural gas utility services to various customers in Buffalo, Niagara Falls, and Jamestown, New York; and Erie and Sharon, Pennsylvania. National Fuel Gas Company was incorporated in 1902 and is headquartered in Williamsville, New York.