RGC Resources, Inc. (RGCO) | Investment Case

1. Company Snapshot

1.a. Company Description

RGC 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.

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1.b. Last Insights on RGCO

RGC Resources' recent performance was driven by a series of positive developments. The company's upcoming third quarter earnings call, scheduled for August 13, 2025, indicates a focus on transparency and investor engagement. Additionally, the recent 38-for-1 stock split has sparked investor interest, with shares of Regencell Bioscience, a Hong Kong-based developer of traditional Chinese herbal treatments, more than tripling in value. Furthermore, RGC Resources' solid net profit margins, rising earnings, and bullish analyst ratings suggest a strong financial foundation.

1.c. Company Highlights

Last Price	23.06
Change Percentage	1.63%
Open	22.48
Previous Close	22.69
Market Cap ( Millions)	238
Volume	12443
Year High	23.82
Year Low	19.06
M A 50	21.61
M A 200	21.48

FCF Yield	3.11%
Dividend Yield	3.60%
ROE	11.56%
Debt / Equity	128.37%
Net Debt / EBIDTA	448.18%
Price To Book	2.1
Price Earnings Ratio	17.94
Price To FCF	32.17
Price To sales	2.49
EV / EBITDA	11.79

2. RGC Resources' Fiscal 2025 Earnings: A Strong Year Amidst Continued Growth

RGC Resources reported a strong fiscal 2025, with net income reaching $13.3 million or $1.29 per share, a 15% increase from the previous year's $11.8 million or $1.16 per share. The company's revenue growth was driven by record gas deliveries and significant customer growth, with nearly 5 main miles installed, 50% higher than the total main miles installed in fiscal 2024. The actual EPS for the fourth quarter came out at $0.01, beating estimates of -$0.05. The company's capital expenditures (CapEx) were $20.7 million, down 6% from the 2024 fiscal year.

Publication Date: Dec -07

                                    📋 Highlights
                                    Record Gas Deliveries & Customer Growth::
                                                Fiscal 2025 saw record gas deliveries, with 5 main miles installed (50% higher than 2024) and 700+ new services connected.
Net Income & EPS Growth::
                                                Net income rose to $13.3M ($1.29/share) in 2025, up 15% from $11.8M ($1.16/share) in 2024.
Lower Capital Expenditures::
                                                CapEx decreased to $20.7M in 2025, a 6% decline from $22M in 2024, despite infrastructure expansion.
Rate Case & Tax Credit Refunds::
                                                Filed for a $4.3M annual revenue increase and committed to returning tax credits to customers over 12 months.
Dividend Increase Authorization::
                                                Board approved a 5% dividend hike to $0.04/share, reflecting confidence in sustained growth and profitability.

                                

Operational Highlights

The company's operational performance was marked by a significant increase in new services, with over 700 new connections. Residential and commercial volumes were slightly up compared to the same quarter in the prior year. The company's investment in the Mountain Valley Pipeline (MVP) was supported by debt refinancing, extending the maturity to 2032. As the company mentioned, "We're hearing a more precise announcement around Google's intentions may occur in 2026, although no specific date has been set," indicating potential future growth drivers.

Outlook and Guidance

For fiscal 2026, RGC Resources expects continued momentum with new housing growth in the Roanoke Valley and expansion in the healthcare and medical sectors. The company has a capital budget of $22 million and expects customer growth to drive investments. The earnings per share guidance for 2026 is $0.87 per share, with a range due to uncertainty around volume, deliveries, weather, and rate making. Analysts estimate next year's revenue growth at 3.0%.

Valuation and Dividend

With a P/E Ratio of 17.14 and a Dividend Yield of 3.77%, RGC Resources' stock appears to be reasonably valued. The company's ROE stands at 11.56%, indicating a decent return on equity. The Board authorized a $0.04 per share dividend increase, a 5% increase, reflecting the company's confidence in its future prospects. The Net Debt / EBITDA ratio is 4.48, indicating a manageable debt burden.

Rate Case and Tax Credits

RGC Resources filed an expedited rate case on December 2, seeking a $4.3 million increase in annual revenues. The company also recently reached an agreement to return tax credits to customers over the next 12 months. This move is expected to benefit customers and potentially drive further growth.

3. NewsRoom

RGC Resources, Inc. (RGCO) Q4 2025 Earnings Call Transcript

Dec -04

Source: seekingalpha.com

RGC Resources (NASDAQ:RGCO) Stock Passes Above Two Hundred Day Moving Average – Here’s Why

Dec -03

Source: defenseworld.net

RGC Resources, Inc. Raises Annual Dividend to $0.87 Per Share

Nov -24

Source: globenewswire.com

RGC Resources, Inc. Schedules Fourth Quarter 2025 Earnings Call

Nov -20

Source: globenewswire.com

RGC Resources Inc. (RGCO) Reports Q4 Loss, Tops Revenue Estimates

Nov -20

Source: zacks.com

RGC Resources, Inc. Reports 2025 Earnings

Nov -19

Source: globenewswire.com

RGC Resources: MVP Pipeline Ignites A Hidden Growth Opportunity

Nov -06

Source: seekingalpha.com

Mountain Valley Pipeline, LLC Files Formal Application Requesting FERC Authorization to Construct MVP Boost

Oct -23

Source: prnewswire.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (4.83%)

6. Segments

Gas Utility

Expected Growth: 4.83%

RGC Resources, Inc.'s 4.83% growth in Gas Utility segment is driven by increasing demand for natural gas, expansion of customer base, and investments in infrastructure upgrades. Additionally, favorable weather conditions, economic growth, and regulatory support for gas infrastructure development contribute to the segment's growth.

Parent and Other

Expected Growth: 4.83%

RGC Resources, Inc.'s 4.83% growth in Parent and Other segments is driven by increasing demand for natural gas, strategic acquisitions, and cost savings initiatives. Additionally, favorable weather conditions and a strong economy contribute to the growth. The company's focus on infrastructure development and expansion into new markets also supports the upward trend.

7. Detailed Products

Natural Gas Distribution

RGC Resources, Inc. provides natural gas distribution services to residential, commercial, and industrial customers in Virginia.

Propane Sales

RGC Resources, Inc. offers propane sales and delivery services for residential, commercial, and agricultural customers.

Energy Efficiency Solutions

RGC Resources, Inc. provides energy-efficient solutions, including energy audits, weatherization, and energy-saving products.

Appliance Sales and Service

RGC Resources, Inc. sells and services natural gas and propane-powered appliances, including water heaters, furnaces, and generators.

Pipeline Construction and Maintenance

RGC Resources, Inc. provides pipeline construction, maintenance, and repair services for natural gas infrastructure.

8. RGC Resources, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for RGC Resources, Inc. is medium due to the availability of alternative energy sources and the increasing adoption of renewable energy.

Bargaining Power Of Customers

The bargaining power of customers for RGC Resources, Inc. is low due to the lack of negotiating power and the company's ability to maintain prices.

Bargaining Power Of Suppliers

The bargaining power of suppliers for RGC Resources, Inc. is medium due to the dependence on a few large suppliers and the potential for price increases.

Threat Of New Entrants

The threat of new entrants for RGC Resources, Inc. is low due to the high barriers to entry and the significant capital requirements.

Intensity Of Rivalry

The intensity of rivalry for RGC Resources, Inc. is high due to the competitive nature of the energy industry and the presence of several large competitors.

9. SWOT Analysis

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

	Value
Debt Weight	58.36%
Debt Cost	4.90%
Equity Weight	41.64%
Equity Cost	4.90%
WACC	4.90%
Leverage	140.15%

11. Quality Control: RGC Resources, Inc. passed 3 out of 9 key points

Strong Liquidity

Low Deb

Strong Interest Coverage

Healthy Cash Flow

Operating Inefficiency

Strong Return On Equity

Consistent Revenue Growth

Consistent Operating Cash Flow Growth

Margin Improvement

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Northwest Natural

A-Score: 6.5/10

Value: 6.5

Growth: 3.2

Quality: 4.0

Yield: 8.0

Momentum: 7.0

Volatility: 10.0

1-Year Total Return ->

NiSource

A-Score: 6.3/10

Value: 5.0

Growth: 3.3

Quality: 4.7

Yield: 6.0

Momentum: 8.5

Volatility: 10.0

1-Year Total Return ->

Suburban Propane

A-Score: 6.2/10

Value: 6.4

Growth: 2.4

Quality: 5.1

Yield: 10.0

Momentum: 4.5

Volatility: 8.7

1-Year Total Return ->

Aris Water Solutions

A-Score: 6.0/10

Value: 6.0

Growth: 8.6

Quality: 4.7

Yield: 5.0

Momentum: 8.5

Volatility: 3.3

1-Year Total Return ->

RGC Resources

A-Score: 5.6/10

Value: 4.7

Growth: 3.6

Quality: 4.9

Yield: 8.0

Momentum: 6.5

Volatility: 6.0

1-Year Total Return ->

OPAL Fuels

A-Score: 4.5/10

Value: 9.7

Growth: 8.6

Quality: 5.1

Yield: 0.0

Momentum: 1.0

Volatility: 2.3

1-Year Total Return ->

Peers Metrics

12.e Scoring ^Insights

12.f DCF ^BETA

Parameters

Short Term Growth

25.45%

Short term Time

10.0

Long-Term Growth

2.00%

WACC

4.90%

RGC Resources, Inc. - US74955L1035

1. Company Snapshot

1.a. Company Description

1.b. Last Insights on RGCO

1.c. Company Highlights

Average Yield

Medium Volatility

Average Quality

Earnings Miss

Revenues Beats

Stable Momentum

Strong Momentum

Lower Growth

Earnings Beats

Expensive

Average Growth

Fairly Valued

2. RGC Resources' Fiscal 2025 Earnings: A Strong Year Amidst Continued Growth

Operational Highlights

Outlook and Guidance

Valuation and Dividend

Rate Case and Tax Credits

3. NewsRoom

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (4.83%)

6. Segments

Gas Utility

Expected Growth: 4.83%

Parent and Other

Expected Growth: 4.83%

7. Detailed Products

Natural Gas Distribution

Propane Sales

Energy Efficiency Solutions

Appliance Sales and Service

Pipeline Construction and Maintenance

8. RGC Resources, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Bargaining Power Of Customers

Bargaining Power Of Suppliers

Threat Of New Entrants

Intensity Of Rivalry

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

11. Quality Control: RGC Resources, Inc. passed 3 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

23.06$

Current Price

23.06$

Potential

-0.00%

Expected Cash-Flows

12.e Scoring ^Insights

12.f DCF ^BETA