Loading...

Gas Natural

AMEX:EGAS
Snowflake Description

Imperfect balance sheet and overvalued.

The Snowflake is generated from 30 checks in 5 different areas, read more below.
EGAS
AMEX
$134M
Market Cap
Gas Utilities
Company description

Gas Natural Inc. distributes and sells natural gas to residential, commercial, industrial, agricultural, and transportation customers. More info.


Add to Portfolio Compare Print Invest WARNING!
Gas Natural is covered by less than 3 analysts.
SHARE PRICE
3 Month History
EGAS
Industry
5yr Volatility vs Market

Value

 Is Gas Natural undervalued based on future cash flows and its price relative to the stock market?

Value is all about what a company is worth versus what price it is available for. If you went into a grocery store and all the bananas were on sale at half price, they could be considered undervalued.
INTRINSIC VALUE BASED ON FUTURE CASH FLOWS
Here we compare the current share price of Gas Natural to its discounted cash flow value.

The discounted cash flow value is simply looking at what the company is worth today, based on estimates of how much money it is expected to make in the future.

Dividends have been used for this discounted cash flow calculation, why is this?

  • The current share price of Gas Natural is above its future cash flow value.
Often investors are willing to pay a premium for a company that has a high dividend or the potential for future growth.
PRICE RELATIVE TO MARKET
We can also value a company based on what the stock market is willing to pay for it. This is similar to the price of fruit (e.g. Mangoes or Avacados) increasing when they are out of season, or how much your home is worth.

The amount the stock market is willing to pay for Gas Natural's earnings, growth and assets is considered below, and whether this is a fair price.
Price based on past earnings
Are Gas Natural's earnings available for a low price, and how does this compare to other companies in the same industry?
  • Overvalued based on earnings compared to the Utilities industry average.
  • Overvalued based on earnings compared to the overall market.
Price based on expected Growth
Does Gas Natural's expected growth come at a high price?
  • Information is not available.
Price based on value of assets
What value do investors place on Gas Natural's assets?
  • Good value based on assets compared to the Utilities industry average.
X
Value checks
We assess Gas Natural's value by looking at:
  1. Is the discounted cash flow value less than 20%, or 40% of the share price? (2 checks) (Click here or on bar chart for details of DCF calculation.)
  2. Is the PE ratio less than the market average, and/ or less than the Utilities industry average (and greater than 0)? (2 checks)
  3. Is the PEG ratio within a reasonable range (0 to 1)? (1 check)
  4. Is the PB ratio less than the Utilities industry average (and greater than 0)? (1 check)
  5. Gas Natural has a total score of 1/6, see the detailed checks below.

    Note: We use GAAP Earnings per Share in all our calculations including PE and PEG Ratio.
    Note 2: PEG ratio is based on analysts EPS growth expectations in 1 year (0%).

    Full details on the Value part of the Simply Wall St company analysis model.
X
Discounted cash flow (Dividend Discount Model)

The calculations below outline how an intrinsic value for Gas Natural is arrived at by discounting future dividends to their present value. This approach is used for finance firms where free cash flow is difficult to estimate (e.g. Banks/ Insurance firms).

If the firm does not pay the majority of its earnings out as a dividend this method will often arrive at a value significantly lower than the share price.

See our documentation to learn about this calculation.



Value of the stock

Value = Expected dividends per share / (Discount Rate - Perpetual growth rate)
$3.38 = ($0.3 / (8.47% - 2.33%)

Value per share:
$3.38

Current discount (share price of $12.7): -275%



Estimate of Discount Rate

The discount rate, or required rate of return, is estimated by calculating the Cost of Equity.

Discount rate = Cost of Equity = Risk Free Rate + (Levered Beta * Equity Risk Premium)

Discount rate = 8.47% = 2.33% + (0.8 * 7.67%)



Estimate of Bottom Up Beta

The Levered is used in the case of financial firms, but it is not adjusted for financial leverage like with non-finance firms. Therefore the average levered beta from comparable firms is used as the bottom-up beta. It is limited to 0.8 to 2.0 (practical range for a stable firm).

Average Levered Beta from peers = 0.583

Levered Beta used in calculation = 0.8



Assumptions
  1. The risk free rate of 2.33% is from the 10 year government bond rate in US.
  2. The bottom-up beta is estimated by analysing other companies in the same industry.
  3. The Equity Risk Premium is calculated by subtracting the risk free rate from the market return premium (10%) (source: Buffet).
  4. The dividend discount model is automatically used for companies in the following industries: Banks, Insurance, Real Estate Investment Trusts (REITs), Diversified Financial Services and Capital Markets.

Future Performance

 How is Gas Natural expected to perform in the next 1 to 3 years based on estimates from 0 analysts?

  • Future performance analysis is based on estimates from less than 3 analysts.
The future performance of a company is measured in the same way as past performance, by looking at estimated growth and how much profit it is expected to make.

Future estimates come from professional analysts. Just like forecasting the weather, they don’t always get it right!
  • Insufficient estimate data, unable to calculate 1 year growth expectation.
Past and Future Earnings per Share
The accuracy of the analysts who estimate the future performance data can be gauged below. We look back 3 years and see if they were any good at predicting what actually occured. We also show the highest and lowest estimates looking forward to see if there is a wide range.
Analysts growth expectations
2 year growth check
Super high growth metrics x1.5?

Which of the these is expected to increase by over 50% in 2 year's time?

  • Revenue data unavailable.
  • Cash flow data unavailable.
  • Profit data unavailable.
Performance in 3 years
In the same way as past performance we look at the future estimated return (profit) compared to the available funds. We do this looking forward 3 years.
  • No 3 year Return on Equity data available.

Improvement & Relative to industry
  • No 3 year Return on Equity data available.
  • No 3 year Return on Equity data available.
X
Future performance checks
We assess Gas Natural's future performance by looking at:
  1. Is the growth in earnings expected to beat the low risk savings rate, plus a premium to keep pace with inflation, in 1 year and 3 years? (2 checks)
  2. Does the average analyst expect Revenue to increase by 50% or more in 2 years? (1 check)
  3. Does the average analyst expect Operating Cash Flow to increase by 50% or more in 2 years? (1 check)
  4. Does the average analyst expect Net Income (Profit) to increase by 50% or more in 2 years? (1 check)
  5. Is the Return on Equity in 3 years expected to be over 20%? (1 check)
Some of the above checks will fail if the company is expected to be loss making in the relevant year.
Gas Natural has a total score of 0/6, see the detailed checks below.

Note: If no +3 year data is available, +2.5 year data may be used.

Note 2: We use GAAP per Share in all our calculations.

Full details on the Future part of the Simply Wall St company analysis model.

Past Performance

 How has Gas Natural performed over the past 5 years?

The past performance of a company can be measured by how much growth it has experienced and how much profit it makes relative to the funds and assets it has available.
Past earnings growth
Below we compare Gas Natural's growth in the last year to its industry (Utilities).
Past Earnings growth analysis
We also check if the company has grown in the past 5 years, and whether it has maintained that growth in the year.
  • Gas Natural's has become profitable in the last year making it difficult to compare the industry average.
  • Gas Natural's has been loss making last year but is now profitable.
  • Gas Natural earnings have fallen over the past 5 years.
Profit History
Gas Natural's revenue and profit over the past 5 years is shown below, any years where they have experienced a loss will show up in red.
Performance last year
We want to ensure a company is making the most of what it has available. This is done by comparing the return (profit) to a company's available funds, assets and capital.
  • Poor return on shareholders funds (ROE) last year.
  • Gas Natural performed worse than the Utilities industry average based on return on assets (ROA) last year.
  • Return based on revenue producing assets (ROCE) is negative or zero.
X
Past performance checks
We assess Gas Natural's performance over the past 5 years by checking for:
  1. Has earnings per share (EPS) increased in past 5 years? (1 check)
  2. Has the EPS growth in the last year exceeded that of the Utilities industry? (1 check)
  3. Is the current EPS growth higher than the average annual growth over the past 5 years? (1 check)
  4. Is the Return on Equity (ROE) higher than 20%? (1 check)
  5. Is the Return on Assets (ROA) above industry average? (1 check)
  6. Has the Return on Capital Employed (ROCE) increased from 3 years ago? (1 check)
The above checks will fail if the company has reported a loss in the most recent earnings report. Some checks require at least 3 or 5 years worth of data.
Gas Natural has a total score of 0/6, see the detailed checks below.

Note: We use GAAP Earnings per Share in all our calculations.

Full details on the Past part of the Simply Wall St company analysis model.

Health

 How is Gas Natural's financial health and their level of debt?

A company's financial position is much like your own financial position, it includes everything you own (assets) and owe (liabilities).

The boxes below represent the relative size of what makes up Gas Natural's finances.

The net worth of a company is the difference between its assets and liabilities.
Net Worth
  • Gas Natural is able to meet its short term (1 year) commitments with its holdings of cash and other short term assets.
  • Gas Natural's long term commitments exceed its cash and other short term assets.
Balance sheet
This treemap shows a more detailed breakdown of Gas Natural's finances. If any of them are yellow this indicates they may be out of proportion and red means they relate to one of the checks below.
Assets
Liabilities and shares
The 'shares' portion represents any funds contributed by the owners (shareholders) and any profits.
  • High level of stock/ inventory/ unsold assets.
  • Total debt is not covered by total short term assets.
Historical Debt
Nearly all companies have debt. Debt in itself isn’t bad, however if the debt is too high, or the company can’t afford to pay the interest on its debts this may have impacts in the future.

The graphic below shows equity (available funds) and debt, we ideally want to see the red area (debt) decreasing.

If there is any debt we look at the companies capability to repay it, and whether the level has increased over the past 5 years.
  • The level of debt (65%) compared to net worth is high (greater 40%).
  • The level of debt compared to net worth has increased over the past 5 years (64% vs 65% today).
  • Total debt is well covered by annual operating cash flow (greater than 20% of total debt).
  • Interest on debt is not strongly covered (ideally 3x) by earnings (EBIT is 0.7x annual interest expense).
X
Financial health checks
We assess Gas Natural's financial health by checking for:
  1. Are short term assets greater than short term liabilities? (1 check)
  2. Are short term assets greater than long term liabilities? (1 check)
  3. Has the debt to equity ratio increased in the past 5 years? (1 check)
  4. Is the debt to equity ratio over 40%? (1 check)
  5. Is the debt covered by short term assets? (1 check)
  6. Are earnings greater than 5x the interest on debt (if comapany pays interest at all)? (1 check)
  7. Gas Natural has a total score of 2/6, see the detailed checks below.


Full details on the Health part of the Simply Wall St company analysis model.

Dividends

 What is Gas Natural's current dividend yield, its reliability and sustainability?

Dividends are regular cash payments to you from the company, similar to a bank paying you interest on a savings account.
Annual Dividend Income
Dividend payments
2.37%
Current annual income from Gas Natural dividends.
If you bought $2,000 of Gas Natural shares you are expected to receive $47 in your first year as a dividend.
Dividend Amount
Here we look how much dividend is being paid, if any. Is it above what you can get in a savings account? It is up there with the best dividend paying companies?
  • Paying above low risk savings rate. (2.25%)
  • Paying below the markets top dividend payers. (3.18%)
Upcoming dividend payment

Purchase Gas Natural on or before the 'Buy Limit' to receive their next dividend payment.

Dividends are usually paid every 3 or 6 months, you can time your share purchase to take advantage of upcoming dividend payments.
Dividend payment calendar
Historical dividend yield
It is important to see if the dividend for a company is stable, and not wildly increasing/decreasing each year. This graph shows you the historical rate to count toward your assessment of the stock.

We also check to see if the dividend has increased in the past 10 years.
  • Dividends per share have been volatile in the past 10 (annual drop of over 10%).
  • Dividends per share have fallen over the past 10 years.
Current Payout to shareholders
What portion of Gas Natural's earnings are paid to the shareholders as a dividend.
  • Dividends paid are not well covered by net profit (0.3x coverage).
Future Payout to shareholders
  • Insufficient estimate data to determine if a dividend will be paid in 3 years.
X
Income/ dividend checks
We assess Gas Natural's dividend by checking for:
  1. Firstly is the company paying a notable dividend (greater than 0.5%) - if not then the rest of the checks are ignored.
  2. Current dividend yield, is there one at all, is it higher than the low risk savings rate, and is it above the top 25% of dividend payers? (2 checks)
  3. Have they paid a dividend for 10 years, and during this period has the dividend been volatile (drop of more than 25%)? (1 check)
  4. If they have paid a dividend for 10 years has it increased in this time? (1 check)
  5. How sustainable is the dividend, can Gas Natural afford to pay it from its earnings today and in 3 years (Payout ratio less than 90%)? (2 checks)
  6. Gas Natural has a total score of 1/6, see the detailed checks below.


Full details on the Dividends part of the Simply Wall St company analysis model.

Management

 What is the CEO of Gas Natural's salary, the management and board of directors tenure and is there insider trading?

Management is one of the most important areas of a company. We look at unreasonable CEO compensation, how long the team and board of directors have been around for and insider trading.
CEO
Greg Osborne, image provided by Google.
Greg Osborne
COMPENSATION$427,124
AGE38
CEO Bio

Mr. Gregory J. Osborne, also known Greg has been the President and Chief Executive Officer of Gas Natural Inc. since November 20, 2013 and May 14, 2014 respectively. Mr. Osborne served as the Chief Operating Officer of Gas Natural Inc. since November 2013 until August 1, 2014. He served as the President and Chief Operating Officer of John D. Oil & Gas Company from April 7, 2006 to January 28, 2012. From 2003 to April 2006, Mr. Osborne served as President of Great Plains Exploration LLC. Since 2001, he served as Executive Vice President of Orwell Natural Gas Company. He has been a Director at Gas Natural Inc. since September 2009. Mr. Osborne serves as a Trustee of the Ohio Oil and Gas Association. He served as a Director at Corning Natural Gas Corp. from April 2009 to September 13, 2010. He served as Director of John D. Oil & Gas Co. from February 24, 2006 to January 28, 2012. Mr. Osborne received a bachelor degree from The Ohio State University with a major in Business.

CEO Compensation
  • CEO's compensation has been consistent with company performance over the past year.
  • CEO's compensation appears reasonable.
Management Team Tenure

Average tenure of the Gas Natural management team:

Management tenure
3.6 years
  • The tenure for the Gas Natural management team is about average.
Management Team

Greg Osborne

TITLE
Chief Executive Officer
COMPENSATION
$427,124
AGE
38

Jim Sprague

TITLE
Chief Financial Officer and Vice President
COMPENSATION
$364,045
AGE
57

Kevin Degenstein

TITLE
Chief Operating Officer and Chief Compliance Officer
COMPENSATION
$306,827
AGE
58

Jed Henthorne

TITLE
President of Energy West Montana
COMPENSATION
$176,869
AGE
57

Marty Whelan

TITLE
President of Northeast Ohio Natural Gas Inc
COMPENSATION
$202,543
AGE
50

Christopher Hubbert

TITLE
Corporate Secretary
AGE
50
Board of Directors Tenure

Average tenure of the Gas Natural board of directors:

Board tenure
3.5 years
  • The tenure for the Gas Natural board of directors is about average.
Board of Directors

Mike Winter

TITLE
Chairman of the Board
COMPENSATION
$67,909
AGE
64

Greg Osborne

TITLE
Chief Executive Officer
COMPENSATION
$427,124
AGE
38

Richard Greaves

TITLE
Director
COMPENSATION
$67,909
AGE
46

Michael Bender

TITLE
Director
COMPENSATION
$67,909
AGE
39

Jim Carney

TITLE
Director
COMPENSATION
$67,909
AGE
65

Rob Johnston

TITLE
Director
COMPENSATION
$67,909
AGE
52
Recent Insider Trading
Who owns this company?
X
Management checks
We assess Gas Natural's management by checking for:
  1. Is the CEO's compensation unreasonable compared to market cap and profit (greater than 0.5% of the company's profit + 0.03% of market cap)? (1 check)
  2. Has the CEO's compensation increased more than 20% whilst the EPS is down more then 20%? (1 check)
  3. Is the average tenure of the management team less than 2 years? (1 check)
  4. Is the average tenure of the board of directors team less than 3 years? (1 check)
  5. Gas Natural has a total score of 6/6, this is not included on the snowflake, see the detailed checks below.


Note: We use the top 6 management executives and board members in our calculations.

Note 2: Insider trading include any internal stakeholders and these transactions.

Full details on the Management part of the Simply Wall St company analysis model.

Company News

Company Info

Description

Gas Natural Inc. distributes and sells natural gas to residential, commercial, industrial, agricultural, and transportation customers. The company operates through Natural Gas and Marketing & Production segments. It distributes approximately 21 billion cubic feet (Bcf) of natural gas to 69,400 customers through regulated utilities operating in Maine, Montana, North Carolina, and Ohio. The company markets approximately 3.6 Bcf of natural gas to a regulated utility in Wyoming, and to commercial and industrial customers in Montana and Ohio; and manages midstream supply and production assets for transportation customers and utilities. It also owns approximately 160 natural gas producing wells and gas gathering assets located in Glacier and Toole Counties in Montana. The company was formerly known as Energy, Inc. and changed its name to Gas Natural Inc. in July 2010. Gas Natural Inc. was founded in 1909 and is based in Cleveland, Ohio.

Details
Name:Gas Natural Inc.
Ticker:EGAS
Exchange:AMEX
Founded:1909
Market Cap:$134 million
Website:http://www.ewst.com
Listings
Map

1375 East 9th Street, Cleveland, 44114, United States

Number of employees
Street

Current staff
Staff numbers
184
Gas Natural employees.
Industry
Industry:Gas Utilities
Sector:Utilities