Northwest Natural Gas (NWN) & The Competition Critical Review

Northwest Natural Gas (NYSE: NWN) is one of 24 public companies in the “UTIL-GAS DISTR” industry, but how does it contrast to its peers? We will compare Northwest Natural Gas to similar businesses based on the strength of its dividends, institutional ownership, analyst recommendations, valuation, earnings, risk and profitability.

Volatility & Risk

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Northwest Natural Gas has a beta of 0.42, suggesting that its share price is 58% less volatile than the S&P 500. Comparatively, Northwest Natural Gas’ peers have a beta of 0.64, suggesting that their average share price is 36% less volatile than the S&P 500.

Earnings & Valuation

This table compares Northwest Natural Gas and its peers gross revenue, earnings per share and valuation.

Gross Revenue Net Income Price/Earnings Ratio
Northwest Natural Gas $762.17 million -$55.62 million -29.38
Northwest Natural Gas Competitors $4.81 billion $278.67 million -12.31

Northwest Natural Gas’ peers have higher revenue and earnings than Northwest Natural Gas. Northwest Natural Gas is trading at a lower price-to-earnings ratio than its peers, indicating that it is currently more affordable than other companies in its industry.

Institutional & Insider Ownership

68.0% of Northwest Natural Gas shares are owned by institutional investors. Comparatively, 65.8% of shares of all “UTIL-GAS DISTR” companies are owned by institutional investors. 1.5% of Northwest Natural Gas shares are owned by company insiders. Comparatively, 4.7% of shares of all “UTIL-GAS DISTR” companies are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Profitability

This table compares Northwest Natural Gas and its peers’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Northwest Natural Gas -7.30% 7.75% 2.10%
Northwest Natural Gas Competitors 5.66% -4.14% 3.79%

Analyst Ratings

This is a summary of current ratings for Northwest Natural Gas and its peers, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Northwest Natural Gas 2 4 0 0 1.67
Northwest Natural Gas Competitors 161 583 465 17 2.28

Northwest Natural Gas currently has a consensus price target of $59.33, indicating a potential upside of 4.09%. As a group, “UTIL-GAS DISTR” companies have a potential upside of 5.59%. Given Northwest Natural Gas’ peers stronger consensus rating and higher possible upside, analysts clearly believe Northwest Natural Gas has less favorable growth aspects than its peers.

Dividends

Northwest Natural Gas pays an annual dividend of $1.89 per share and has a dividend yield of 3.3%. Northwest Natural Gas pays out -97.4% of its earnings in the form of a dividend. As a group, “UTIL-GAS DISTR” companies pay a dividend yield of 2.9% and pay out 65.7% of their earnings in the form of a dividend. Northwest Natural Gas has increased its dividend for 62 consecutive years. Northwest Natural Gas is clearly a better dividend stock than its peers, given its higher yield and lower payout ratio.

Summary

Northwest Natural Gas peers beat Northwest Natural Gas on 10 of the 15 factors compared.

About Northwest Natural Gas

Northwest Natural Gas Company (NW Natural) is engaged in the distribution of natural gas. The Company’s segments include Local Gas Distribution, Gas Storage and other. The Company maintains operations in Oregon, Washington and California and conducts businesses through NW Natural and its subsidiaries. The local gas distribution business, referred to as the utility segment, serves residential, commercial, and industrial customers in Oregon and southwest Washington. The Company’s gas storage business, referred to as the gas storage segment, provides storage services for utilities, gas marketers, electric generators and industrial users from storage facilities located in Oregon and California. The Company’s other segment is referred to as non-utility and consists of non-utility investments and other business activities. The other segment consists of an equity method investment in Trail West Holdings, LLC (TWH) and other pipeline assets in NNG Financial Corporation.

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