Southern Union (NYSE: SUG) and NewJersey Resources (NYSE:NJR) are both mid-cap utilities companies, but which is the superior business? We will compare the two companies based on the strength of their earnings, institutional ownership, profitability, valuation, analyst recommendations, risk and dividends.

Insider & Institutional Ownership

63.8% of NewJersey Resources shares are held by institutional investors. 1.5% of NewJersey 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.

Earnings and Valuation

This table compares Southern Union and NewJersey Resources’ gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Southern Union N/A N/A N/A $2.02 N/A
NewJersey Resources $2.27 billion 1.70 $132.06 million $1.52 29.18

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

Dividends

NewJersey Resources pays an annual dividend of $1.09 per share and has a dividend yield of 2.5%. Southern Union does not pay a dividend. NewJersey Resources pays out 71.7% of its earnings in the form of a dividend. Southern Union has raised its dividend for 21 consecutive years.

Analyst Recommendations

This is a breakdown of recent ratings for Southern Union and NewJersey Resources, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Southern Union 0 0 0 0 N/A
NewJersey Resources 1 1 2 0 2.25

NewJersey Resources has a consensus target price of $41.00, suggesting a potential downside of 7.55%.

Profitability

This table compares Southern Union and NewJersey Resources’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Southern Union N/A N/A N/A
NewJersey Resources 5.82% 11.97% 3.83%

Volatility and Risk

Southern Union has a beta of 0.87, indicating that its share price is 13% less volatile than the S&P 500. Comparatively, NewJersey Resources has a beta of 0.45, indicating that its share price is 55% less volatile than the S&P 500.

Summary

NewJersey Resources beats Southern Union on 8 of the 12 factors compared between the two stocks.

About Southern Union

Southern Union Company (Southern Union) is engaged in the gathering, processing, transportation, storage and distribution of natural gas in the United States. The Company owns and operates assets in the regulated and unregulated natural gas industry. Southern Union operates in three segments: Transportation and Storage, which is engaged in the interstate transportation and storage of natural gas and provides liquefied natural gas (LNG) terminalling and re-gasification services; Gathering and Processing, which is engaged in the gathering, treating, processing and redelivery of natural gas and natural gas liquid (NGL) in Texas and New Mexico, and Distribution, which is engaged in the local distribution of natural gas in Missouri. Effective December 20, 2013, Algonquin Power & Utilities Corp. (APUC) announced that, Liberty Utilities, APUC’s regulated distribution utility, acquired the Massachusetts natural gas distribution utility assets (New England Gas Assets) of Southern Union Company.

About NewJersey Resources

New Jersey Resources Corporation is an energy services holding company. The Company’s business is the distribution of natural gas through a regulated utility, which provides other retail and wholesale energy services to customers and investing in clean energy projects and midstream assets. It operates in four business segments: Natural Gas Distribution, Clean Energy Ventures, Energy Services and Midstream. The Natural Gas Distribution segment consists of regulated natural gas services, off-system sales, capacity and storage management operations. The Energy Services segment consists of unregulated wholesale energy operations. The Clean Energy Ventures segment consists of capital investments in clean energy projects. The Midstream segment consists of investments in the midstream natural gas market, such as natural gas transportation and storage facilities. The Home Services and Other operations consist of heating, cooling and water appliance sales and installations, among others.

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