Critical Review: National Fuel Gas (NFG) & Just Energy (JE)

National Fuel Gas (NYSE: NFG) and Just Energy (NYSE:JE) are both utilities companies, but which is the superior business? We will contrast the two businesses based on the strength of their institutional ownership, valuation, profitability, risk, dividends, earnings and analyst recommendations.

Analyst Ratings

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This is a summary of current ratings and price targets for National Fuel Gas and Just Energy, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
National Fuel Gas 0 2 2 0 2.50
Just Energy 0 1 6 0 2.86

National Fuel Gas presently has a consensus target price of $60.50, suggesting a potential upside of 20.02%. Just Energy has a consensus target price of $7.75, suggesting a potential upside of 74.55%. Given Just Energy’s stronger consensus rating and higher possible upside, analysts plainly believe Just Energy is more favorable than National Fuel Gas.

Dividends

National Fuel Gas pays an annual dividend of $1.66 per share and has a dividend yield of 3.3%. Just Energy pays an annual dividend of $0.39 per share and has a dividend yield of 8.8%. National Fuel Gas pays out 50.3% of its earnings in the form of a dividend. Just Energy pays out 118.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. National Fuel Gas has increased its dividend for 47 consecutive years and Just Energy has increased its dividend for 2 consecutive years.

Insider and Institutional Ownership

71.6% of National Fuel Gas shares are owned by institutional investors. Comparatively, 30.5% of Just Energy shares are owned by institutional investors. 2.4% of National Fuel Gas shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Profitability

This table compares National Fuel Gas and Just Energy’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
National Fuel Gas 24.93% 16.36% 4.79%
Just Energy 5.74% -214.69% 23.59%

Earnings & Valuation

This table compares National Fuel Gas and Just Energy’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
National Fuel Gas $1.58 billion 2.74 $283.48 million $3.30 15.28
Just Energy $2.84 billion 0.23 $340.07 million $0.33 13.45

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

Volatility and Risk

National Fuel Gas has a beta of 0.87, meaning that its stock price is 13% less volatile than the S&P 500. Comparatively, Just Energy has a beta of 0.79, meaning that its stock price is 21% less volatile than the S&P 500.

Summary

National Fuel Gas beats Just Energy on 10 of the 17 factors compared between the two stocks.

About National Fuel Gas

National Fuel Gas Company is a holding company. The Company is an energy company engaged principally in the production, gathering, transportation, distribution and marketing of natural gas. The Company operates in five business segments: Exploration and Production, Pipeline and Storage, Gathering, Utility, and Energy Marketing. The Company operates an integrated business, with assets centered in western New York and Pennsylvania, and the production and transportation of natural gas from the Marcellus Shale basin. The Company also develops and produces oil reserves, primarily in California. The Company’s Exploration and Production segment operations are carried out by Seneca Resources Corporation (Seneca), a Pennsylvania corporation. The Company’s National Fuel Gas Supply Corporation (Supply Corporation), a Pennsylvania corporation, and Empire Pipeline, Inc. (Empire), a New York corporation, carry out the Company’s Pipeline and Storage segment operations.

About Just Energy

Just Energy Group Inc., through its subsidiaries, provides electricity, natural gas, and renewable energy solutions in the United States, Canada, the United Kingdom, Ireland, Germany, and Japan. It operates through Consumer Energy and Commercial Energy segments. The company offers various home and business energy solutions, including long-term fixed-price, variable-price, and flat-bill solutions to residential and commercial customers. It also provides solar energy solutions; carbon emissions solutions, such as carbon offsets and renewable energy credits; and smart thermostats. As of May 17, 2017, the company served two million residential and commercial customers. It markets its products through various sales channels comprising door-to-door marketing, brokers, online marketing, and others. The company was founded in 1997 and is based in Mississauga, Canada.

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