Head-To-Head Review: Eversource Energy (NYSE:ES) versus NorthWestern (NASDAQ:NWE)

NorthWestern (NASDAQ:NWE) and Eversource Energy (NYSE:ES) are both utilities companies, but which is the better investment? We will contrast the two companies based on the strength of their risk, dividends, profitability, valuation, institutional ownership, analyst recommendations and earnings.

Profitability

This table compares NorthWestern and Eversource Energy’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
NorthWestern	10.21%	7.80%	2.69%
Eversource Energy	12.55%	11.59%	2.97%

Risk & Volatility

NorthWestern has a beta of 0.34, indicating that its share price is 66% less volatile than the S&P 500. Comparatively, Eversource Energy has a beta of 0.7, indicating that its share price is 30% less volatile than the S&P 500.

Institutional and Insider Ownership

96.1% of NorthWestern shares are held by institutional investors. Comparatively, 80.0% of Eversource Energy shares are held by institutional investors. 0.9% of NorthWestern shares are held by insiders. Comparatively, 0.2% of Eversource Energy shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Dividends

NorthWestern pays an annual dividend of $2.68 per share and has a dividend yield of 3.7%. Eversource Energy pays an annual dividend of $3.15 per share and has a dividend yield of 4.2%. NorthWestern pays out 98.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Eversource Energy pays out 67.3% of its earnings in the form of a dividend. NorthWestern has raised its dividend for 21 consecutive years and Eversource Energy has raised its dividend for 2 consecutive years. Eversource Energy is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Recommendations

This is a breakdown of current ratings for NorthWestern and Eversource Energy, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
NorthWestern	1	2	3	0	2.33
Eversource Energy	3	6	3	0	2.00

NorthWestern currently has a consensus target price of $70.10, suggesting a potential downside of 3.59%. Eversource Energy has a consensus target price of $71.91, suggesting a potential downside of 3.91%. Given NorthWestern’s stronger consensus rating and higher probable upside, equities research analysts clearly believe NorthWestern is more favorable than Eversource Energy.

Valuation & Earnings

This table compares NorthWestern and Eversource Energy”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
NorthWestern	$1.61 billion	2.78	$181.09 million	$2.72	26.73
Eversource Energy	$13.93 billion	2.02	$1.69 billion	$4.68	15.99

Eversource Energy has higher revenue and earnings than NorthWestern. Eversource Energy is trading at a lower price-to-earnings ratio than NorthWestern, indicating that it is currently the more affordable of the two stocks.

Summary

Eversource Energy beats NorthWestern on 9 of the 16 factors compared between the two stocks.

About NorthWestern

NorthWestern Energy Group, Inc. provides electricity and natural gas to residential, commercial, and various industrial customers. It generates, purchases, transmits, and distributes electricity; and produces, purchases, stores, transmits, and distributes natural gas, as well as owns municipal franchises to provide natural gas service in the communities. The company operates 6,600 miles of electric transmission and 18,674 miles of electric distribution lines with approximately 395 transmission and distribution substations; and 2,235 miles of natural gas transmission and 5,155 miles of natural gas distribution lines with approximately 133 city gate stations in Montana. It also operates 1,310 miles of electric transmission and 2,365 miles of electric distribution lines in South Dakota with approximately 124 transmission and distribution substations; and 55 miles of natural gas transmission and 2,573 miles of natural gas distribution lines in South Dakota and Nebraska. The company provides electricity and/or natural gas to approximately 775,300 customers in Montana, South Dakota, Nebraska, and Yellowstone National Park. NorthWestern Energy Group, Inc. was founded in 1923 and is based in Sioux Falls, South Dakota.

About Eversource Energy

Eversource Energy, a public utility holding company, engages in the energy delivery business. The company operates through Electric Distribution, Electric Transmission, Natural Gas Distribution, and Water Distribution segments. It is involved in the transmission and distribution of electricity; solar power facilities; and distribution of natural gas. The company operates regulated water utilities that provide water services to approximately 241,000 customers. It serves residential, commercial, industrial, municipal and fire protection, and other customers in Connecticut, Massachusetts, and New Hampshire. The company was formerly known as Northeast Utilities and changed its name to Eversource Energy in April 2015. Eversource Energy was incorporated in 1927 and is headquartered in Springfield, Massachusetts.