The coronavirus pandemic is spreading at an alarming rate. Despite taking various measures, the number of infected people is increasing each day. Per Johns Hopkins University and Medicine, the virus has already infected 432,132 people in the United States, while 23,906 patients have recovered. Till now, there is no cure available for COVID-19. As a whole, the global economy is declining rapidly. Investors are getting increasingly apprehensive about a market meltdown.
However, Utilities are providing basic services like electric, water, and natural gas and helping millions of customers who are staying at home as a precaution against COVID-19. The awareness to lower emission and higher volume of exports has boosted domestic natural gas production in the United States.
Gas pipelines play a crucial role in delivering natural gas from intrastate and interstate transmission pipelines to consumers through small diameter distribution pipelines. Notably, the natural gas network in the United States has nearly 3 million miles of pipeline. Increasing consumption of natural gas in the United States and internationally is driving demand for distribution pipelines.
In this article, we run a comparative analysis on two Utility - Gas Distribution companies — ONE Gas, Inc. OGS and National Fuel Gas Company NFG — to ascertain which is a better stock to be retained in the portfolio.
Both the stocks currently carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
ONE Gas has a market capitalization of $4.38 billion, while the same for National Fuel Gas is $3.22 billion.
The Zacks Consensus Estimate for ONE Gas’ 2020 earnings is pegged at $3.62 on revenues of $1.70 billion. This suggests 3.13% and 3.03% increase of the bottom and the top line, respectively, from the year-ago reported figures.
The Zacks Consensus Estimate for National Fuel Gas’ 2020 earnings is pegged at $2.94 on revenues of $1.75 billion. This indicates 14.78% decline of the bottom line and 3.52% increase of the top line from the year-ago reported figures.
Amid the current scenario, shares of most of the industry players are declining. In the past month, ONE Gas’ shares have gained 2.2% against the industry's decline of 9%. Shares of National Fuel Gas have lost 3.7%.
The debt-to-capital is a good indicator of the financial position of a company. The indicator shows how much debt is used to run the business. ONE Gas and National Fuel Gas have a debt-to-capital of 37.65% and 49.45%, respectively, compared with the industry’s 48.80%.
Utility companies generally distribute dividends. Currently, the dividend yield for ONE Gas is pegged at 2.61%, while National Fuel Gas’ dividend yield is 4.68%. Both the company’s dividend yield is better than the Zacks S&P 500 composite’s 2.31%.
Return on Equity (ROE)
ROE is a measure of a company’s efficiency in utilizing shareholder’s funds. ROE for the trailing 12 months for ONE Gas and National Fuel Gas is 8.85% and 13.54%, respectively. National Fuel Gas has outperformed the industry’s ROE of 9.05%.
Even though both these companies are efficiently providing services to customers and should be retained in one’s portfolio, the above-mentioned comparisons put ONE Gas ahead of National Fuel Gas.
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National Fuel Gas Company (NFG) : Free Stock Analysis Report
ONE Gas, Inc. (OGS) : Free Stock Analysis Report
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