Comparing Delta Natural Gas (NASDAQ:DGAS) and NewJersey Resources Corporation (NJR)

NewJersey Resources Corporation (NYSE: NJR) and Delta Natural Gas (NASDAQ:DGAS) are both utilities companies, but which is the superior investment? We will contrast the two companies based on the strength of their dividends, analyst recommendations, valuation, profitability, institutional ownership, risk and earnings.

Insider and Institutional Ownership

65.0% of NewJersey Resources Corporation shares are owned by institutional investors. Comparatively, 36.4% of Delta Natural Gas shares are owned by institutional investors. 1.5% of NewJersey Resources Corporation shares are owned by company insiders. Comparatively, 4.2% of Delta Natural Gas shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Profitability

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

Net Margins Return on Equity Return on Assets
NewJersey Resources Corporation 8.81% 12.77% 4.10%
Delta Natural Gas 9.35% 8.08% 3.31%

Volatility & Risk

NewJersey Resources Corporation has a beta of 0.47, suggesting that its share price is 53% less volatile than the S&P 500. Comparatively, Delta Natural Gas has a beta of 0.56, suggesting that its share price is 44% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of current ratings for NewJersey Resources Corporation and Delta Natural Gas, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
NewJersey Resources Corporation 1 1 2 0 2.25
Delta Natural Gas 0 0 0 0 N/A

NewJersey Resources Corporation presently has a consensus target price of $37.25, indicating a potential downside of 13.47%. Given NewJersey Resources Corporation’s higher probable upside, equities analysts clearly believe NewJersey Resources Corporation is more favorable than Delta Natural Gas.

Dividends

NewJersey Resources Corporation pays an annual dividend of $1.02 per share and has a dividend yield of 2.4%. Delta Natural Gas pays an annual dividend of $0.83 per share and has a dividend yield of 2.7%. NewJersey Resources Corporation pays out 45.7% of its earnings in the form of a dividend. Delta Natural Gas pays out 93.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Delta Natural Gas has raised its dividend for 21 consecutive years. Delta Natural Gas is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Earnings and Valuation

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

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
NewJersey Resources Corporation $2.20 billion 1.69 $321.77 million $2.23 19.30
Delta Natural Gas $67.09 million 3.25 $20.21 million $0.89 34.42

NewJersey Resources Corporation has higher revenue and earnings than Delta Natural Gas. NewJersey Resources 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.

Summary

NewJersey Resources Corporation beats Delta Natural Gas on 9 of the 16 factors compared between the two stocks.

About NewJersey Resources Corporation

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.

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.

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