Head-To-Head Contrast: Spire (NYSE:SR) & RGC Resources (NASDAQ:RGCO)

Spire (NYSE:SR) and RGC Resources (NASDAQ:RGCO) are both utilities companies, but which is the superior business? We will compare the two companies based on the strength of their earnings, dividends, risk, institutional ownership, valuation, profitability and analyst recommendations.

Dividends

Spire pays an annual dividend of $3.30 per share and has a dividend yield of 4.4%. RGC Resources pays an annual dividend of $0.87 per share and has a dividend yield of 4.1%. Spire pays out 36.8% of its earnings in the form of a dividend. RGC Resources pays out 64.9% 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 RGC Resources has raised its dividend for 22 consecutive years. Spire is clearly the better dividend stock, given its higher yield and lower payout ratio.

Risk and Volatility

Spire has a beta of 0.54, suggesting that its share price is 46% less volatile than the S&P 500. Comparatively, RGC Resources has a beta of 0.52, suggesting that its share price is 48% less volatile than the S&P 500.

Valuation and Earnings

This table compares Spire and RGC Resources”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Spire	$2.48 billion	1.81	$271.70 million	$8.97	8.45
RGC Resources	$95.33 million	2.31	$13.28 million	$1.34	15.78

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

Profitability

This table compares Spire and RGC Resources’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Spire	21.48%	8.65%	2.21%
RGC Resources	13.05%	11.73%	4.15%

Analyst Recommendations

This is a summary of recent ratings and price targets for Spire and RGC Resources, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Spire	0	6	7	1	2.64
RGC Resources	0	0	2	0	3.00

Spire presently has a consensus price target of $92.50, suggesting a potential upside of 22.04%. RGC Resources has a consensus price target of $27.00, suggesting a potential upside of 27.69%. Given RGC Resources’ stronger consensus rating and higher probable upside, analysts plainly believe RGC Resources is more favorable than Spire.

Institutional and Insider Ownership

87.4% of Spire shares are owned by institutional investors. Comparatively, 35.8% of RGC Resources shares are owned by institutional investors. 2.3% of Spire shares are owned by company insiders. Comparatively, 7.2% of RGC Resources 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

Spire beats RGC Resources on 10 of the 17 factors compared between the two stocks.

About Spire

Spire Inc., together with its subsidiaries, engages in the purchase, retail distribution, and sale of natural gas to residential, commercial, industrial, and other end-users of natural gas in the United States. The company operates through three segments: Gas Utility, Gas Marketing, and Midstream. It is also involved in the marketing of natural gas and related services; and transportation and storage of natural gas. In addition, the company engages in the operation of propane through its propane pipeline, risk management, and other activities. The company was formerly known as The Laclede Group, Inc. and changed its name to Spire Inc. in April 2016. Spire Inc. was founded in 1857 and is based in Saint Louis, Missouri.

About RGC Resources

RGC Resources, Inc., through its subsidiaries, operates as an energy services company. It sells and distributes natural gas to residential, commercial, and industrial customers in Roanoke, Virginia, and the surrounding localities. The company also provides various unregulated services. It operates approximately 1,179 miles of transmission and distribution pipeline; and a liquefied natural gas storage facility, as well as owns and operates six metering stations. In addition, it produces biogas. RGC Resources, Inc. was founded in 1883 and is based in Roanoke, Virginia.