RGC Resources (NASDAQ:RGCO) & Northwest Natural Gas (NYSE:NWN) Head to Head Review

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

Analyst Recommendations

This is a breakdown of recent ratings for Northwest Natural Gas and RGC Resources, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Northwest Natural Gas	0	2	4	1	2.86
RGC Resources	0	0	2	0	3.00

Northwest Natural Gas presently has a consensus target price of $55.80, indicating a potential upside of 16.25%. RGC Resources has a consensus target price of $27.00, indicating a potential upside of 26.02%. Given RGC Resources’ stronger consensus rating and higher possible upside, analysts clearly believe RGC Resources is more favorable than Northwest Natural Gas.

Dividends

Northwest Natural Gas pays an annual dividend of $1.97 per share and has a dividend yield of 4.1%. RGC Resources pays an annual dividend of $0.87 per share and has a dividend yield of 4.1%. Northwest Natural Gas pays out 65.7% 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. Northwest Natural Gas has raised its dividend for 70 consecutive years and RGC Resources has raised its dividend for 22 consecutive years. Northwest Natural Gas is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Institutional & Insider Ownership

75.1% of Northwest Natural Gas shares are owned by institutional investors. Comparatively, 35.8% of RGC Resources shares are owned by institutional investors. 0.6% of Northwest Natural Gas shares are owned by insiders. Comparatively, 7.2% of RGC Resources shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Northwest Natural Gas	9.75%	8.33%	2.03%
RGC Resources	13.05%	11.73%	4.15%

Risk and Volatility

Northwest Natural Gas has a beta of 0.44, suggesting that its stock price is 56% less volatile than the S&P 500. Comparatively, RGC Resources has a beta of 0.52, suggesting that its stock price is 48% less volatile than the S&P 500.

Valuation and Earnings

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Northwest Natural Gas	$1.29 billion	1.57	$113.32 million	$3.00	16.00
RGC Resources	$95.33 million	2.34	$13.28 million	$1.34	15.99

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

Summary

RGC Resources beats Northwest Natural Gas on 10 of the 18 factors compared between the two stocks.

About Northwest Natural Gas

Northwest Natural Holding Company, through its subsidiary, Northwest Natural Gas Company, provides regulated natural gas distribution services to residential, commercial, and industrial customers in the United States. The company operates a mist gas storage facility contracted to other utilities, third-party marketers, and electric generators; offers natural gas asset management services; and operates an appliance retail center. It also engages in gas storage, water and wastewater, non-regulated renewable natural gas, and other investment businesses. In addition, the company provides natural gas service in Oregon and southwest Washington; and water and wastewater connections. Northwest Natural Holding Company was founded in 1859 and is headquartered in Portland, Oregon.

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.