RGC Resources (NASDAQ:RGCO – Get Free Report) and Northwest Natural Gas (NYSE:NWN – Get Free Report) are both small-cap utilities companies, but which is the superior business? We will compare the two businesses based on the strength of their profitability, institutional ownership, earnings, valuation, dividends, analyst recommendations and risk.
Dividends
RGC Resources pays an annual dividend of $0.87 per share and has a dividend yield of 4.0%. Northwest Natural Gas pays an annual dividend of $1.97 per share and has a dividend yield of 4.2%. RGC Resources pays out 64.9% of its earnings in the form of a dividend. Northwest Natural Gas pays out 65.7% 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. RGC Resources has increased its dividend for 22 consecutive years and Northwest Natural Gas has increased its dividend for 70 consecutive years. Northwest Natural Gas is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Analyst Recommendations
This is a breakdown of recent recommendations and price targets for RGC Resources and Northwest Natural Gas, as provided by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| RGC Resources | 0 | 0 | 2 | 0 | 3.00 |
| Northwest Natural Gas | 0 | 2 | 4 | 1 | 2.86 |
Risk and Volatility
RGC Resources has a beta of 0.5, meaning that its share price is 50% less volatile than the S&P 500. Comparatively, Northwest Natural Gas has a beta of 0.4, meaning that its share price is 60% less volatile than the S&P 500.
Institutional & Insider Ownership
35.8% of RGC Resources shares are held by institutional investors. Comparatively, 75.1% of Northwest Natural Gas shares are held by institutional investors. 7.2% of RGC Resources shares are held by company insiders. Comparatively, 0.6% of Northwest Natural Gas shares are held 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.
Profitability
This table compares RGC Resources and Northwest Natural Gas’ net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| RGC Resources | 13.05% | 11.73% | 4.15% |
| Northwest Natural Gas | 9.75% | 8.33% | 2.03% |
Earnings and Valuation
This table compares RGC Resources and Northwest Natural Gas”s top-line revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| RGC Resources | $95.33 million | 2.38 | $13.28 million | $1.34 | 16.27 |
| Northwest Natural Gas | $1.29 billion | 1.54 | $113.32 million | $3.00 | 15.77 |
Northwest Natural Gas has higher revenue and earnings than RGC Resources. Northwest Natural Gas is trading at a lower price-to-earnings ratio than RGC Resources, indicating that it is currently the more affordable of the two stocks.
Summary
RGC Resources beats Northwest Natural Gas on 10 of the 18 factors compared between the two stocks.
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.
About Northwest Natural Gas
Northwest Natural Holding Company, through its subsidiary, Northwest Natural Gas Company, provides regulated natural gas distribution services to residential, commercial, and industrial customers in the United States. The company operates a mist gas storage facility contracted to other utilities, third-party marketers, and electric generators; offers natural gas asset management services; and operates an appliance retail center. It also engages in gas storage, water and wastewater, non-regulated renewable natural gas, and other investment businesses. In addition, the company provides natural gas service in Oregon and southwest Washington; and water and wastewater connections. Northwest Natural Holding Company was founded in 1859 and is headquartered in Portland, Oregon.
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