Head to Head Analysis: Northwest Natural Gas (NWN) and South Jersey Industries (SJI)

Northwest Natural Gas (NYSE: NWN) and South Jersey Industries (NYSE:SJI) are both utilities companies, but which is the superior stock? We will compare the two companies based on the strength of their risk, valuation, profitability, earnings, dividends, analyst recommendations and institutional ownership.

Analyst Ratings

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This is a breakdown of current recommendations for Northwest Natural Gas and South Jersey Industries, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Northwest Natural Gas 2 4 0 0 1.67
South Jersey Industries 0 5 2 0 2.29

Northwest Natural Gas presently has a consensus target price of $59.33, indicating a potential upside of 0.56%. South Jersey Industries has a consensus target price of $32.80, indicating a potential upside of 9.63%. Given South Jersey Industries’ stronger consensus rating and higher probable upside, analysts clearly believe South Jersey Industries is more favorable than Northwest Natural Gas.

Risk & Volatility

Northwest Natural Gas has a beta of 0.36, indicating that its stock price is 64% less volatile than the S&P 500. Comparatively, South Jersey Industries has a beta of 0.59, indicating that its stock price is 41% less volatile than the S&P 500.

Insider & Institutional Ownership

68.0% of Northwest Natural Gas shares are held by institutional investors. Comparatively, 70.5% of South Jersey Industries shares are held by institutional investors. 1.5% of Northwest Natural Gas shares are held by insiders. Comparatively, 0.6% of South Jersey Industries shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Dividends

Northwest Natural Gas pays an annual dividend of $1.89 per share and has a dividend yield of 3.2%. South Jersey Industries pays an annual dividend of $1.12 per share and has a dividend yield of 3.7%. Northwest Natural Gas pays out 84.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. South Jersey Industries pays out 91.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Northwest Natural Gas has raised its dividend for 62 consecutive years.

Profitability

This table compares Northwest Natural Gas and South Jersey Industries’ 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%
South Jersey Industries -0.28% 7.84% 2.60%

Valuation and Earnings

This table compares Northwest Natural Gas and South Jersey Industries’ top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Northwest Natural Gas $762.17 million 2.23 -$55.62 million $2.24 26.34
South Jersey Industries $1.24 billion 1.92 -$3.49 million $1.23 24.33

South Jersey Industries has higher revenue and earnings than Northwest Natural Gas. South Jersey Industries is trading at a lower price-to-earnings ratio than Northwest Natural Gas, indicating that it is currently the more affordable of the two stocks.

Summary

South Jersey Industries beats Northwest Natural Gas on 11 of the 17 factors compared between the two stocks.

Northwest Natural Gas Company Profile

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.

South Jersey Industries Company Profile

South Jersey Industries, Inc. (SJI) is an energy services holding company. The Company provides a range of energy-related products and services, primarily through its subsidiaries. Its subsidiaries include South Jersey Gas Company (SJG), South Jersey Energy Company (SJE), South Jersey Resources Group, LLC (SJRG), South Jersey Exploration, LLC (SJEX), Marina Energy, LLC (Marina), South Jersey Energy Service Plus, LLC (SJESP) and SJI Midstream, LLC (Midstream). Its segments include Gas utility operations (SJG), which consist primarily of natural gas distribution; Wholesale energy operations, which include the activities of SJRG and SJEX; SJE, which is involved in both retail gas and retail electric activities; On-Site energy production, which consists of Marina’s thermal energy facility; Appliance service operations, which include SJESP, and Corporate and Services segment, which includes the activities of Midstream.

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