Reviewing Delek US (NYSE:DK) & RGC Resources (NASDAQ:RGCO)

Delek US (NYSE:DK) and RGC Resources (NASDAQ:RGCO) are both small-cap energy companies, but which is the better business? We will contrast the two companies based on the strength of their valuation, risk, dividends, analyst recommendations, profitability, institutional ownership and earnings.

Analyst Ratings

This is a breakdown of recent ratings and price targets for Delek US and RGC Resources, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Delek US	5	6	3	0	1.86
RGC Resources	0	0	0	0	0.00

Delek US presently has a consensus price target of $24.69, suggesting a potential downside of 13.87%. Given Delek US’s stronger consensus rating and higher possible upside, research analysts clearly believe Delek US is more favorable than RGC Resources.

Dividends

Delek US pays an annual dividend of $1.02 per share and has a dividend yield of 3.6%. RGC Resources pays an annual dividend of $0.83 per share and has a dividend yield of 3.7%. Delek US pays out -8.3% of its earnings in the form of a dividend. RGC Resources pays out 63.4% 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. Delek US has increased its dividend for 2 consecutive years and RGC Resources has increased its dividend for 22 consecutive years. RGC Resources is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Earnings and Valuation

This table compares Delek US and RGC Resources”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Delek US	$10.82 billion	0.16	-$560.40 million	($12.29)	-2.33
RGC Resources	$94.12 million	2.46	$11.76 million	$1.31	17.09

RGC Resources has lower revenue, but higher earnings than Delek US. Delek US 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 Delek US and RGC Resources’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Delek US	-7.11%	-79.27%	-6.24%
RGC Resources	14.48%	12.01%	4.17%

Volatility & Risk

Delek US has a beta of 1.09, meaning that its stock price is 9% more volatile than the S&P 500. Comparatively, RGC Resources has a beta of 0.48, meaning that its stock price is 52% less volatile than the S&P 500.

Institutional & Insider Ownership

97.0% of Delek US shares are owned by institutional investors. Comparatively, 35.8% of RGC Resources shares are owned by institutional investors. 1.8% of Delek US shares are owned by insiders. Comparatively, 6.6% of RGC Resources shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Summary

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

About Delek US

Delek US Holdings, Inc. engages in the integrated downstream energy business in the United States. The company operates through Refining, Logistics, and Retail segments. The Refining segment processes crude oil and other feedstock for the manufacture of various grades of gasoline, diesel fuel, aviation fuel, asphalt, and other petroleum-based products that are distributed through owned and third-party product terminal. It owns and operates refineries located in Tyler, Texas; El Dorado, Arkansas; Big Spring, Texas; and Krotz Springs, Louisiana, as well as biodiesel facilities in Crossett, Arkansas, Cleburne, Texas, and New Albany, Mississippi. The Logistics segment gathers, transports, and stores crude oil, intermediate, and refined products; and markets, distributes, transports, and stores refined products, as well as disposes and recycles water for third parties. It owns or leases crude oil transportation pipelines, refined product pipelines, crude oil gathering systems, and associated crude oil storage tanks; and owns and operates light product distribution terminals, as well as markets light products using third-party terminals. The Retail segment owns and leases convenience store sites located primarily in West Texas and New Mexico. Its convenience stores offer various grades of gasoline and diesel under the DK or Alon brand; and food products and service, tobacco products, non-alcoholic and alcoholic beverages, and general merchandise, as well as money orders to the public primarily under the 7-Eleven and DK or Alon brand names. It serves oil companies, independent refiners and marketers, jobbers, distributors, utility and transportation companies, government, and independent retail fuel operators. Delek US Holdings, Inc. was founded in 2001 and is headquartered in Brentwood, Tennessee.

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.