Definitive Analysis
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RGC Resources, Inc. (RGCO)

Company Dividend Discount ModelIndustry: Regulated GasSector: Utilities

Valuation Snapshot

Stable Growth$25.11 - $55.29$36.12
Multi-Stage$20.96 - $22.87$21.90
Blended Fair Value$29.01
Current Price$22.44
Upside29.27%
DecisionDon't Buy

Dividend History & Growth Metrics (10Y)

Metric5Y CAGR10Y CAGR2025202420232022202120202019201820172016
DPS9.16%8.85%0.780.760.680.580.540.510.450.400.370.35
YoY Growth--3.60%11.32%16.65%7.19%7.50%12.28%12.91%8.07%5.70%3.99%
Dividend Yield--3.50%3.78%3.35%2.65%2.36%2.13%1.58%1.33%1.36%2.10%

Stable Growth Model (Adjusted)

(USD in Millions except Per Share Data)
Net Income To Common (M)13.28
(-) Cash Dividends Paid (M)8.37
(=) Cash Retained (M)4.91
MetricLOWBASEHIGH
Required Retention Ratio20.0%12.5%7.5%
(=) Cash Required (M)2.661.661.00
Cash Retained (M)4.914.914.91
(-) Cash Required (M)-2.66-1.66-1.00
(=) Excess Retained (M)2.263.253.92
(/) Shares Outstanding (M)10.3110.3110.31
(=) Excess Retained per Share0.220.320.38
LTM Dividend per Share0.810.810.81
(+) Excess Retained per Share0.220.320.38
(=) Adjusted Dividend1.031.131.19
WACC / Discount Rate9.10%9.10%9.10%
Growth Rate4.80%5.80%6.80%
Fair Value$25.11$36.12$55.29
Upside / Downside11.88%60.95%146.38%

Multi-Stage Model: Projections

(USD in Millions)
MetricTTMDec-27Dec-28Dec-29Dec-30Dec-31Terminal
Net Income (M)13.2814.0514.8615.7316.6417.6018.13
Payout Ratio63.02%68.41%73.81%79.21%84.60%90.00%92.50%
Projected Dividends (M)8.379.6110.9712.4614.0815.8416.77

Multi-Stage Valuation

MetricLOWBASEHIGH
WACC / Discount Rate9.10%9.10%9.10%
Growth Rate4.80%5.80%6.80%
Year 1 PV (M)8.738.818.89
Year 2 PV (M)9.049.229.39
Year 3 PV (M)9.329.599.87
Year 4 PV (M)9.579.9410.32
Year 5 PV (M)9.7710.2510.74
PV of Terminal Value (M)169.68177.93186.50
Equity Value (M)216.11225.74235.72
Shares Outstanding (M)10.3110.3110.31
Fair Value$20.96$21.90$22.87
Upside / Downside-6.58%-2.42%1.90%

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