Contrasting NewJersey Resources (NYSE:NJR) & ONE Gas (NYSE:OGS)

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

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%

Insider & Institutional Ownership

71.0% of NewJersey Resources shares are held by institutional investors. Comparatively, 88.7% of ONE Gas shares are held by institutional investors. 0.7% of NewJersey Resources shares are held by insiders. Comparatively, 0.9% of ONE Gas shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Dividends

NewJersey Resources pays an annual dividend of $2.00 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 3.4%. 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 increased its dividend for 29 consecutive years and ONE Gas has increased 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.

Volatility and Risk

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

Analyst Recommendations

This is a summary of recent ratings and price targets for NewJersey Resources and ONE Gas, as reported by MarketBeat.

	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 target price of $62.50, indicating a potential upside of 15.45%. ONE Gas has a consensus target price of $86.46, indicating a potential upside of 8.23%. Given NewJersey Resources’ stronger consensus rating and higher possible upside, research analysts clearly believe NewJersey Resources is more favorable than ONE Gas.

Earnings & Valuation

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
NewJersey Resources	$2.23 billion	2.46	$335.63 million	$3.62	14.95
ONE Gas	$2.43 billion	2.07	$264.22 million	$4.64	17.22

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.

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.