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EnergySouth Inc. (ENSI) Management Beats Natural Gas Utilities Norm for Payout Ratio

Investor interest in the Utilities Sector is affected by the fact that dividend growth over the past five years has been negative. The Natural Gas Utilities industry has grown by just 3.13 in this respect. Therefore, a stock with a comparable figure of 6.32 is very interesting.

The company’s annual sales growth over the last four quarters is just 1.53, whereas Earnings per Share have grown by 8.13 on a comparable basis. The Gross Margin has also remained ahead of industry and sector norms. Therefore, management focus on profitability, rather than market share, is clear. This comes at a time when demand for the company’s gas storage facilities is well ahead of installed capacity. It is significant that the company’s Long Term Debt to Equity has been below the industry norm at the end of the Most Recent Quarter. It seems that the company is strongly positioned for business expansion at this point.

This is a holding stock for two distinct operating subsidiary companies. One is in the specialized business of underground storage of natural gas. The other transports the energy to homes and to commercial establishments, and services customers in all respects. The latter marketing arm is one but not the only customer of the underground storage operation. Investors therefore have strong entries into two separate phases of the natural gas area through a single stock. The management policy of relatively high dividend payments supports stock investment even if natural gas prices fall in future.

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