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

Analyst Recommendations

This is a summary of recent ratings and recommmendations for Delta Natural Gas and Southwest Gas Corporation, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Delta Natural Gas 0 0 0 0 N/A
Southwest Gas Corporation 0 3 0 0 2.00

Southwest Gas Corporation has a consensus target price of $79.00, suggesting a potential upside of 1.22%. Given Southwest Gas Corporation’s higher probable upside, analysts plainly believe Southwest Gas Corporation is more favorable than Delta Natural Gas.

Volatility and Risk

Delta Natural Gas has a beta of 0.57, meaning that its share price is 43% less volatile than the S&P 500. Comparatively, Southwest Gas Corporation has a beta of 0.62, meaning that its share price is 38% less volatile than the S&P 500.

Profitability

This table compares Delta Natural Gas and Southwest Gas Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Delta Natural Gas 8.00% 7.12% 2.91%
Southwest Gas Corporation 6.46% 9.09% 2.73%

Earnings & Valuation

This table compares Delta Natural Gas and Southwest Gas Corporation’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Delta Natural Gas $68.84 million 3.18 $19.26 million $0.89 34.48
Southwest Gas Corporation $2.40 billion 1.55 $568.17 million $3.24 24.09

Southwest Gas Corporation has higher revenue and earnings than Delta Natural Gas. Southwest Gas Corporation 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.

Dividends

Delta Natural Gas pays an annual dividend of $0.75 per share and has a dividend yield of 2.4%. Southwest Gas Corporation pays an annual dividend of $1.98 per share and has a dividend yield of 2.5%. Delta Natural Gas pays out 84.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Southwest Gas Corporation pays out 61.1% of its earnings in the form of a dividend. Southwest Gas Corporation has raised its dividend for 5 consecutive years. Southwest Gas Corporation is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Insider & Institutional Ownership

36.8% of Delta Natural Gas shares are owned by institutional investors. Comparatively, 76.8% of Southwest Gas Corporation shares are owned by institutional investors. 4.2% of Delta Natural Gas shares are owned by company insiders. Comparatively, 1.0% of Southwest Gas Corporation shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Summary

Southwest Gas Corporation beats Delta Natural Gas on 10 of the 15 factors compared between the two stocks.

About Delta Natural Gas

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.

About Southwest Gas Corporation

Southwest Gas Holdings, Inc., formerly Southwest Gas Corporation, is engaged in the business of purchasing, distributing and transporting natural gas. The Company operates through two segments: natural gas operations and construction services, which includes the operations of the Company’s subsidiary, Centuri Construction Group, Inc. (Centuri). The Company operates two pipeline transmission systems, such as a system, which includes a liquefied natural gas (LNG) storage facility owned by Paiute extending from the Idaho-Nevada border to the Reno, Sparks, and Carson City areas and communities in the Lake Tahoe area in both California and Nevada and other communities in northern and western Nevada, and a system extending from the Colorado River at the southern tip of Nevada to the Las Vegas distribution area.

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