Head-To-Head Analysis: UGI (UGI) & Vectren (VVC)

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

Volatility and Risk

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UGI has a beta of 0.56, meaning that its stock price is 44% less volatile than the S&P 500. Comparatively, Vectren has a beta of 0.59, meaning that its stock price is 41% less volatile than the S&P 500.

Institutional and Insider Ownership

78.1% of UGI shares are held by institutional investors. Comparatively, 64.1% of Vectren shares are held by institutional investors. 2.4% of UGI shares are held by company insiders. Comparatively, 0.1% of Vectren shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Analyst Recommendations

This is a summary of current ratings for UGI and Vectren, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
UGI 1 2 1 0 2.00
Vectren 0 3 1 0 2.25

UGI currently has a consensus target price of $47.00, indicating a potential upside of 5.36%. Vectren has a consensus target price of $64.67, indicating a potential downside of 0.85%. Given UGI’s higher possible upside, equities analysts clearly believe UGI is more favorable than Vectren.

Profitability

This table compares UGI and Vectren’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
UGI 8.71% 10.88% 3.65%
Vectren 8.13% 11.91% 3.62%

Earnings and Valuation

This table compares UGI and Vectren’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
UGI $6.12 billion 1.26 $436.60 million $2.29 19.48
Vectren $2.66 billion 2.04 $216.00 million $2.60 25.08

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

Dividends

UGI pays an annual dividend of $1.00 per share and has a dividend yield of 2.2%. Vectren pays an annual dividend of $1.80 per share and has a dividend yield of 2.8%. UGI pays out 43.7% of its earnings in the form of a dividend. Vectren pays out 69.2% 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. UGI has raised its dividend for 32 consecutive years and Vectren has raised its dividend for 58 consecutive years. Vectren is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

About UGI

UGI Corporation is a holding company. The Company distributes, stores, transports and markets energy products and related services. It operates through six segments. The AmeriGas Propane segment consists of the propane distribution business of AmeriGas Partners, L.P. The UGI France segment consists of the French LPG distribution business of its subsidiaries, Antargaz, Finagaz and its liquefied petroleum gases (LPG) distribution businesses. The Flaga & Other segment consists of the LPG distribution businesses of Flaga GmbH, AvantiGas Limited and ChinaGas Partners, L.P. The Energy Services segment consists of energy-related businesses conducted by its subsidiary, UGI Energy Services, LLC (Energy Services). The Electric Generation segment consists of electric generation facilities conducted by Energy Services’ subsidiary. The Gas Utility segment consists of the regulated natural gas distribution businesses of its subsidiary, UGI Utilities, Inc.

About Vectren

Vectren Corporation provides energy delivery services to residential, commercial, and industrial and other contract customers. The company offers natural gas distribution and transportation services, and electric transmission and distribution services; and owns and operates coal-fired, natural gas or oil-fired, and landfill gas electric generating facilities with an installed generating capacity of 1,248 megawatts. Its electric transmission system consists of approximately 1,028 circuit miles of 345, 138, and 69 kilovolt lines, and 34 substations; and distribution system comprises 4,543 circuit miles of lower voltage overhead lines and 462 trench miles of conduit containing 2,405 circuit miles of underground distribution cable, as well as 85 distribution substations and 54,919 distribution transformers. The company also provides underground pipeline construction and repair services; and energy performance contracting and sustainable infrastructure, such as renewables, distributed generation, and combined heat and power projects, as well as invests in energy-related opportunities and services. It serves various industries comprising automotive assembly, parts, and accessories; feed, flour, and grain processing; metal castings and plastic products; gypsum products; electrical equipment, metal specialties, and glass and steel finishing; pharmaceutical and nutritional products; gasoline and oil products; ethanol; and coal mining. The company supplies natural gas services to approximately 1,022,000 customers in Indiana and Ohio; and electric services to approximately 145,200 customers in Indiana. Vectren Corporation was incorporated in 1999 and is headquartered in Evansville, Indiana.

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