Critical Survey: ONE Gas (NYSE:OGS) vs. Spire (NYSE:SR)

Spire (NYSE:SR) and ONE Gas (NYSE:OGS) are both mid-cap utilities companies, but which is the better business? We will contrast the two companies based on the strength of their institutional ownership, earnings, analyst recommendations, risk, profitability, dividends and valuation.

Analyst Recommendations

This is a breakdown of recent ratings for Spire and ONE Gas, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Spire	0	5	7	1	2.69
ONE Gas	0	6	7	0	2.54

Spire presently has a consensus target price of $92.91, indicating a potential upside of 4.73%. ONE Gas has a consensus target price of $87.12, indicating a potential upside of 5.33%. Given ONE Gas’ higher possible upside, analysts clearly believe ONE Gas is more favorable than Spire.

Dividends

Spire pays an annual dividend of $3.30 per share and has a dividend yield of 3.7%. ONE Gas pays an annual dividend of $2.72 per share and has a dividend yield of 3.3%. Spire pays out 36.8% of its earnings in the form of a dividend. ONE Gas pays out 58.0% 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. Spire has raised its dividend for 22 consecutive years and ONE Gas has raised its dividend for 2 consecutive years. Spire is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Earnings & Valuation

This table compares Spire and ONE Gas”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Spire	$2.67 billion	1.97	$271.70 million	$8.97	9.89
ONE Gas	$2.43 billion	2.14	$264.22 million	$4.69	17.64

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

Volatility and Risk

Spire has a beta of 0.5, suggesting that its share price is 50% less volatile than the S&P 500. Comparatively, ONE Gas has a beta of 0.62, suggesting that its share price is 38% less volatile than the S&P 500.

Institutional and Insider Ownership

87.4% of Spire shares are held by institutional investors. Comparatively, 88.7% of ONE Gas shares are held by institutional investors. 2.3% of Spire shares are held by insiders. Comparatively, 0.9% of ONE Gas shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Profitability

This table compares Spire and ONE Gas’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Spire	21.48%	8.65%	2.21%
ONE Gas	12.61%	8.80%	3.48%

Summary

Spire beats ONE Gas on 10 of the 17 factors compared between the two stocks.

About Spire

Spire Inc. is a natural gas utility holding company that distributes natural gas to residential, commercial and industrial customers. Its regulated utility operations serve customers in Missouri, Alabama and Mississippi. In addition to its utility businesses, Spire operates natural gas marketing and midstream businesses. These activities include marketing natural gas and developing and operating infrastructure that supports its delivery. The company traces its roots to Laclede Gas, founded in St. Louis in 1857.

About ONE Gas

ONE Gas, Inc. is a regulated natural gas distribution company that delivers natural gas to residential, commercial and industrial customers. Its operations serve communities in Oklahoma, Kansas and Texas. The company operates through three utility divisions: Oklahoma Natural Gas, Kansas Gas Service and Texas Gas Service. Its services include distributing natural gas through local pipeline systems and maintaining the infrastructure used to provide that service. ONE Gas became an independent, publicly traded company in 2014 after separating from ONEOK, Inc. Its business is focused on natural gas distribution rather than exploration or production.