ONE Gas (NYSE:OGS) vs. NewJersey Resources (NYSE:NJR) Financial Analysis

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

Volatility and Risk

NewJersey Resources has a beta of 0.48, indicating that its share price is 52% less volatile than the S&P 500. Comparatively, ONE Gas has a beta of 0.64, indicating that its share price is 36% less volatile than the S&P 500.

Dividends

NewJersey Resources pays an annual dividend of $2.00 per share and has a dividend yield of 3.8%. ONE Gas pays an annual dividend of $2.72 per share and has a dividend yield of 3.5%. NewJersey Resources pays out 55.2% of its earnings in the form of a dividend. ONE Gas pays out 58.6% 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. NewJersey Resources has raised its dividend for 29 consecutive years and ONE Gas has raised its dividend for 2 consecutive years. NewJersey Resources is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
NewJersey Resources	16.42%	14.46%	4.67%
ONE Gas	12.47%	8.81%	3.45%

Valuation and Earnings

This table compares NewJersey Resources and ONE Gas”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
NewJersey Resources	$2.04 billion	2.65	$335.63 million	$3.62	14.71
ONE Gas	$2.43 billion	2.03	$264.22 million	$4.64	16.92

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

Analyst Ratings

This is a summary of recent ratings for NewJersey Resources and ONE Gas, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
NewJersey Resources	0	1	5	1	3.00
ONE Gas	0	6	7	0	2.54

NewJersey Resources presently has a consensus price target of $62.50, indicating a potential upside of 17.37%. ONE Gas has a consensus price target of $86.46, indicating a potential upside of 10.15%. Given NewJersey Resources’ stronger consensus rating and higher possible upside, analysts clearly believe NewJersey Resources is more favorable than ONE Gas.

Institutional and Insider Ownership

71.0% of NewJersey Resources shares are owned by institutional investors. Comparatively, 88.7% of ONE Gas shares are owned by institutional investors. 0.7% of NewJersey Resources shares are owned by insiders. Comparatively, 0.9% of ONE Gas shares are owned 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.

Summary

NewJersey Resources beats ONE Gas on 11 of the 18 factors compared between the two stocks.

About NewJersey Resources

New Jersey Resources Corporation, an energy services holding company, distributes natural gas. The company operates through four segments: Natural Gas Distribution, Clean Energy Ventures, Energy Services, and Storage and Transportation. The Natural Gas Distribution segment offers regulated natural gas utility services to approximately 576,000 customers in Burlington, Middlesex, Monmouth, Morris, Ocean, and Sussex counties in New Jersey; provides capacity and storage management services; and participates in the off-system sales and capacity release markets. The Clean Energy Ventures segment invests in, owns, and operates clean energy projects, including commercial and residential solar installation situated in New Jersey, Rhode Island, New York, Connecticut, Michigan, and Indiana. The Energy Services segment maintains and operates natural gas transportation and storage capacity contracts, as well as provides physical wholesale energy, retail energy and energy management services in the United States and Canada. The Storage and Transportation segment invests in invests in energy-related ventures. It provides heating, ventilation, and cooling services; sales and installation of appliances; offers solar equipment installation, and plumbing repair and installation services; and holds commercial real estate properties. The company was incorporated in 1981 and is headquartered in Wall, New Jersey.

About ONE Gas

ONE Gas, Inc., together with its subsidiaries, operates as a regulated natural gas distribution company in the United States. The company provides natural gas distribution services to approximately 2.3 million customers in Oklahoma, Kansas, and Texas. It serves residential, commercial, and transportation customers. The company was founded in 1906 and is headquartered in Tulsa, Oklahoma.