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Rgc Resources Inc. (RGCO)
NASDAQ:RGCO
US Market

Rgc Resources (RGCO) AI Stock Analysis

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Rgc Resources

(NASDAQ:RGCO)

Rating:67Neutral
Price Target:
$22.00
▲(7.84%Upside)
Rgc Resources receives a score of 67, reflecting solid financial performance and a strong earnings call. While technical analysis shows mixed signals, the company's valuation remains reasonable, supported by a healthy dividend yield. The main strengths are robust financials and strategic growth initiatives, tempered by technical indicators suggesting potential caution.

Rgc Resources (RGCO) vs. SPDR S&P 500 ETF (SPY)

Rgc Resources Business Overview & Revenue Model

Company DescriptionRGC 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 1,157 miles of transmission and distribution pipeline; and a liquefied natural gas storage facility, as well as owns and operates 6 metering stations. RGC Resources, Inc. was founded in 1883 and is based in Roanoke, Virginia.
How the Company Makes MoneyRGC Resources generates revenue predominantly through the sale and distribution of natural gas to its customers, which include residential, commercial, and industrial users. The company's revenue model is based on regulated utility rates approved by state regulatory bodies, ensuring a stable income stream. Key revenue streams include gas sales, delivery charges, and service fees. Additionally, RGC Resources benefits from infrastructure investment returns, which are often supported by regulatory mechanisms. The company's earnings are influenced by factors such as natural gas prices, consumption patterns, weather conditions, and regulatory changes.

Rgc Resources Earnings Call Summary

Earnings Call Date:May 06, 2025
(Q2-2025)
|
% Change Since: -5.42%|
Next Earnings Date:Jul 30, 2025
Earnings Call Sentiment Positive
The earnings call reflected a strong performance with significant growth in gas volumes and net income, supported by regulatory achievements and economic development. However, challenges such as reduced capital expenditure, higher interest expense, and potential economic uncertainties were noted.
Q2-2025 Updates
Positive Updates
Strong Main Extensions and Renewals
Installed 2.7 main miles and connected 359 new services in the first half of fiscal 2025, surpassing the total installed in the full 2024 fiscal year.
Increase in Delivered Gas Volumes
Total gas volumes were up 20% compared to Q2 2024, driven by an industrial customer's increased consumption and a 21% increase in heating degree days.
Regulatory Success
State Corporation Commission confirmed rates that produced an annual revenue increase of more than $4 million.
Net Income Growth
Q2 net income increased by 17% to $7.7 million, or $0.74 per share, compared to the previous year.
Strong Balance Sheet
Renewed Roanoke Gas' line of credit for two years, raising the maximum availability to $30 million.
Economic Development and Growth Opportunities
Successful regional economic development with multiple business expansions and a $400 million hospital expansion.
Negative Updates
Reduced Capital Expenditure
Capital spending decreased by approximately 5% in the first half of fiscal 2025 compared to 2024 due to winter weather impacts.
Higher Interest Expense
Despite increased gas margins, earnings were impacted by higher interest expenses.
Potential Economic Uncertainty
Macro factors and tariff uncertainties might affect business activity in the latter half of 2025.
Company Guidance
In the second quarter earnings call for fiscal year 2025, RGC Resources provided guidance on several performance metrics. The company reported a substantial increase in delivered gas volumes, which rose by 20% compared to the same quarter in 2024, driven by an industrial customer's higher natural gas consumption and a 21% increase in heating degree days. Net income for the quarter was $7.7 million or $0.74 per share, a 17% increase from the previous year. For the first half of fiscal 2025, net income reached $12.9 million or $1.26 per share, reflecting an 11% increase from the same period in 2024. Capital expenditures for the first half were $10.7 million, down 5% from the prior year, influenced by weather-related spending delays. Looking ahead, the company raised its full-year earnings per share guidance to between $1.22 and $1.27, while anticipating a small net loss in the fourth quarter due to seasonality in revenue. RGC Resources also highlighted ongoing refinancing efforts for its $26.6 million midstream debt, expected to be completed by December 31, 2025.

Rgc Resources Financial Statement Overview

Summary
RGC Resources demonstrates solid financial performance with consistent revenue growth and strong profitability metrics, including a net profit margin of 14.5% and an EBIT margin of 21.38%. The balance sheet is well-managed with moderate leverage, and cash flow indicators show significant improvement, reflecting financial stability despite some risks due to liabilities.
Income Statement
75
Positive
Rgc Resources has demonstrated consistent revenue growth with a 7.9% increase from the previous period. The company maintains a solid gross profit margin of 36.41% for the TTM period. The net profit margin also showed improvement at 14.5%, indicating strong profitability. The EBIT and EBITDA margins are healthy at 21.38% and 38.31% respectively, reflecting efficient operations. However, the revenue has shown some fluctuations in prior periods, which could indicate market volatility.
Balance Sheet
68
Positive
The company's balance sheet reveals a moderate debt-to-equity ratio of 1.20, suggesting a balanced approach to leverage. The return on equity (ROE) stands at 11.24% for the TTM period, indicating effective management of shareholder funds. An equity ratio of 36.09% reflects a stable financial structure, although the company carries significant liabilities which could pose risks under adverse conditions.
Cash Flow
72
Positive
Rgc Resources exhibits strong cash flow from operations with an operating cash flow to net income ratio of 2.12, signifying robust cash generation relative to profits. The free cash flow growth rate has turned positive, showing a substantial improvement from the previous negative figures, which enhances financial flexibility. The free cash flow to net income ratio is 0.50, highlighting a positive but cautious cash flow position.
Breakdown
TTMSep 2024Sep 2023Sep 2022Sep 2021Sep 2019
Income StatementTotal Revenue
91.31M84.64M97.44M84.17M75.17M68.03M
Gross Profit
33.25M30.29M29.77M26.15M25.49M21.12M
EBIT
19.53M17.08M17.68M7.26M8.69M7.37M
EBITDA
34.98M32.48M30.40M-29.46M24.00M19.19M
Net Income Common Stockholders
13.24M11.76M11.30M-31.73M10.10M8.70M
Balance SheetCash, Cash Equivalents and Short-Term Investments
2.15M894.18K1.51M4.90M1.52M1.63M
Total Assets
326.42M320.70M303.73M290.31M310.11M258.35M
Total Debt
141.83M148.64M141.17M135.70M133.47M103.37M
Net Debt
139.67M147.74M139.66M130.80M131.95M101.74M
Total Liabilities
208.59M212.56M203.00M197.22M210.41M175.26M
Stockholders Equity
117.83M108.14M100.73M93.09M99.70M83.10M
Cash FlowFree Cash Flow
6.56M-4.66M-1.51M-9.91M-8.40M-7.19M
Operating Cash Flow
28.07M17.43M23.80M15.55M11.57M14.70M
Investing Cash Flow
-21.46M-22.03M-27.40M-30.62M-25.85M-42.83M
Financing Cash Flow
-6.47M3.98M218.94K18.44M15.51M29.52M

Rgc Resources Technical Analysis

Technical Analysis Sentiment
Positive
Last Price20.40
Price Trends
50DMA
21.12
Negative
100DMA
20.82
Negative
200DMA
20.55
Positive
Market Momentum
MACD
-0.16
Positive
RSI
48.33
Neutral
STOCH
37.34
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For RGCO, the sentiment is Positive. The current price of 20.4 is below the 20-day moving average (MA) of 20.76, below the 50-day MA of 21.12, and below the 200-day MA of 20.55, indicating a neutral trend. The MACD of -0.16 indicates Positive momentum. The RSI at 48.33 is Neutral, neither overbought nor oversold. The STOCH value of 37.34 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for RGCO.

Rgc Resources Risk Analysis

Rgc Resources disclosed 18 risk factors in its most recent earnings report. Rgc Resources reported the most risks in the "Production" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks

Rgc Resources Peers Comparison

Overall Rating
UnderperformOutperform
Sector (64)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
SRSR
73
Outperform
$4.25B17.787.30%4.36%-7.10%2.54%
NWNWN
71
Outperform
$1.60B15.787.36%4.93%3.88%11.80%
67
Neutral
$213.04M16.0511.60%4.02%9.74%-1.29%
CPCPK
67
Neutral
$2.78B22.039.04%2.30%20.41%13.64%
SPSPH
67
Neutral
$1.22B13.0214.42%6.92%4.02%-14.66%
64
Neutral
$8.56B10.324.24%4.82%4.06%-12.76%
60
Neutral
$556.52M132.92-8.53%16.30%-96.72%
* Utilities Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
RGCO
Rgc Resources
20.40
0.91
4.67%
CPK
Chesapeake Utilities
118.75
17.28
17.03%
SR
Spire
72.22
16.13
28.76%
NWN
Northwest Gas
39.90
6.33
18.86%
SPH
Suburban Propane
18.71
1.66
9.74%
OPAL
OPAL Fuels
3.23
-0.99
-23.46%

Rgc Resources Corporate Events

Business Operations and Strategy
RGC Resources Updates Investor Presentation
Neutral
May 19, 2025

RGC Resources, Inc. has updated the presentation it uses for meetings with analysts, investors, and the financial community. This updated slide presentation, which will be used in future meetings and is available on the company’s website, is intended to provide stakeholders with current insights into the company’s operations and strategic direction.

Financial Disclosures
RGC Resources Hosts Q2 2025 Earnings Call
Neutral
May 8, 2025

RGC Resources, Inc. is hosting a conference call with analysts to discuss the operating results of its second quarter ending March 31, 2025. The call aims to provide insights into the company’s financial performance and strategic direction, potentially impacting its market positioning and stakeholder interests.

Financial Disclosures
RGC Resources Reports Strong Q2 Earnings Growth
Positive
May 7, 2025

RGC Resources, Inc. reported a significant increase in earnings for the second quarter ended March 31, 2025, with net income rising to $7,676,208, or $0.74 per share, compared to $6,443,390, or $0.63 per share, in the same period of 2024. This growth was driven by higher base rates and increased volumes, although it was partially offset by lower earnings from an unconsolidated affiliate and higher interest expenses. The company’s utility margin benefited from cooler winter weather and strong utilization by a large industrial customer. Additionally, the State Corporation Commission made permanent the negotiated rates from a 2024 rate case filing, further solidifying RGC’s market position.

Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.