Financial Analysis: ONE Gas (NYSE:OGS) vs. ENN Energy (OTCMKTS:XNGSF)

ENN Energy (OTCMKTS:XNGSF) and ONE Gas (NYSE:OGS) are both utilities companies, but which is the superior business? We will contrast the two companies based on the strength of their valuation, analyst recommendations, earnings, risk, institutional ownership, profitability and dividends.

Earnings and Valuation

This table compares ENN Energy and ONE Gas”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
ENN Energy	N/A	N/A	N/A	$1.54	4.07
ONE Gas	$2.43 billion	2.08	$264.22 million	$4.64	17.31

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

Insider & Institutional Ownership

40.4% of ENN Energy shares are owned by institutional investors. Comparatively, 88.7% of ONE Gas shares are owned by institutional investors. 0.9% of ONE Gas shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Analyst Ratings

This is a summary of current ratings and recommmendations for ENN Energy and ONE Gas, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
ENN Energy	0	0	0	0	0.00
ONE Gas	0	6	5	0	2.45

ONE Gas has a consensus target price of $89.70, suggesting a potential upside of 11.69%. Given ONE Gas’ stronger consensus rating and higher possible upside, analysts clearly believe ONE Gas is more favorable than ENN Energy.

Profitability

This table compares ENN Energy and ONE Gas’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
ENN Energy	N/A	N/A	N/A
ONE Gas	12.47%	8.81%	3.45%

Dividends

ENN Energy pays an annual dividend of $0.39 per share and has a dividend yield of 6.2%. ONE Gas pays an annual dividend of $2.72 per share and has a dividend yield of 3.4%. ENN Energy pays out 25.1% of its earnings in the form of a dividend. ONE Gas pays out 58.6% 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. ENN Energy is clearly the better dividend stock, given its higher yield and lower payout ratio.

Summary

ONE Gas beats ENN Energy on 12 of the 14 factors compared between the two stocks.

About ENN Energy

ENN Energy Holdings Limited, an investment holding company, engages in the investment, construction, operation, and management of gas pipeline infrastructure in the People's Republic of China. It operates through Retail Gas Sales Business, Integrated Energy Business, Wholesale of Gas, Construction and Installation, and Value Added Business segments. The company also distributes and sells piped gas, liquefied natural gas (LNG), and other multi-energy products; operates vehicle gas refuelling stations; and provides services related to low-carbon integrated solutions. In addition, it is involved in the integrated energy business; retail of gas pipelines, and related materials and equipment; transportation of oil products and gas; and sourcing and sell of LNG, as well as wholesale and retail of LNG, CNG, gas equipment, appliances, and others; and provision of financial services. The company serves residential, commercial, and industrial customers. ENN Energy Holdings Limited was formerly known as XinAo Gas Holdings Limited and changed its name to ENN Energy Holdings Limited in September 2010. The company was founded in 1989 and is headquartered in Langfang, China.

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.