ONE Gas (NYSE:OGS) vs. MDU Resources Group (NYSE:MDU) Critical Contrast

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

Insider and Institutional Ownership

88.7% of ONE Gas shares are held by institutional investors. Comparatively, 71.4% of MDU Resources Group shares are held by institutional investors. 1.4% of ONE Gas shares are held by insiders. Comparatively, 0.9% of MDU Resources Group shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Analyst Recommendations

This is a summary of recent ratings and recommmendations for ONE Gas and MDU Resources Group, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
ONE Gas	0	3	4	0	2.57
MDU Resources Group	0	1	2	0	2.67

ONE Gas currently has a consensus price target of $77.64, indicating a potential upside of 4.01%. MDU Resources Group has a consensus price target of $18.00, indicating a potential upside of 13.49%. Given MDU Resources Group’s stronger consensus rating and higher probable upside, analysts clearly believe MDU Resources Group is more favorable than ONE Gas.

Profitability

This table compares ONE Gas and MDU Resources Group’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
ONE Gas	10.63%	8.07%	2.99%
MDU Resources Group	8.25%	8.29%	3.20%

Risk & Volatility

ONE Gas has a beta of 0.85, suggesting that its share price is 15% less volatile than the S&P 500. Comparatively, MDU Resources Group has a beta of 0.7, suggesting that its share price is 30% less volatile than the S&P 500.

Valuation and Earnings

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
ONE Gas	$2.08 billion	2.15	$222.85 million	$4.19	17.82
MDU Resources Group	$1.76 billion	1.84	$281.11 million	$1.06	14.96

MDU Resources Group has lower revenue, but higher earnings than ONE Gas. MDU Resources Group is trading at a lower price-to-earnings ratio than ONE Gas, indicating that it is currently the more affordable of the two stocks.

Dividends

ONE Gas pays an annual dividend of $2.68 per share and has a dividend yield of 3.6%. MDU Resources Group pays an annual dividend of $0.56 per share and has a dividend yield of 3.5%. ONE Gas pays out 64.0% of its earnings in the form of a dividend. MDU Resources Group pays out 52.8% 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. ONE Gas has increased its dividend for 2 consecutive years and MDU Resources Group has increased its dividend for 1 consecutive years. ONE Gas is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

ONE Gas beats MDU Resources Group on 11 of the 17 factors compared between the two stocks.

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.

About MDU Resources Group

MDU Resources Group, Inc. engages in the regulated energy delivery, and construction materials and services businesses in the United States. It operates through four segments: Electric, Natural Gas Distribution, Pipeline, and Construction Services. The Electric segment generates, transmits, and distributes electricity for residential, commercial, industrial, and municipal customers in Montana, North Dakota, South Dakota, and Wyoming; and operates 3,400 miles of transmission lines, 4,800 miles of distribution lines, and 82 transmission and 298 distribution substations. The Natural Gas Distribution segment distributes natural gas for residential, commercial, and industrial customers in Idaho, Minnesota, Montana, North Dakota, Oregon, South Dakota, Washington, and Wyoming; and supplies related value-added services. The Pipeline segment provides natural gas transportation and underground storage services through a regulated pipeline system primarily in the Rocky Mountain and northern Great Plains regions; and cathodic protection and other energy-related services. The Construction Services segment offers electrical and mechanical contracting services, including the construction and maintenance of electrical and communication wiring and infrastructure, fire suppression systems, mechanical piping, and services; transmission and distribution contracting services, comprise construction and maintenance of overhead and underground electrical, and gas and communication infrastructure; and manufactures and supplies transmission and distribution lines construction equipment and tools. It serves manufacturing, commercial, industrial, transportation, institutional, and renewable and government customers, as well as utilities. MDU Resources Group, Inc. was incorporated in 1924 and is headquartered in Bismarck, North Dakota.