Northwest Natural Gas (NYSE: NWN) and Piedmont Natural Gas (NYSE:PNY) are both utilities companies, but which is the superior business? We will contrast the two businesses based on the strength of their institutional ownership, dividends, risk, earnings, analyst recommendations, valuation and profitabiliy.

Institutional & Insider Ownership

63.7% of Northwest Natural Gas shares are held by institutional investors. Comparatively, 61.5% of Piedmont Natural Gas shares are held by institutional investors. 1.5% of Northwest Natural Gas shares are held by company insiders. Comparatively, 1.4% of Piedmont Natural Gas shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Analyst Ratings

This is a breakdown of recent recommendations for Northwest Natural Gas and Piedmont Natural Gas, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Northwest Natural Gas 0 2 1 0 2.33
Piedmont Natural Gas 0 0 0 0 N/A

Northwest Natural Gas currently has a consensus target price of $75.00, indicating a potential upside of 20.97%. Given Northwest Natural Gas’ higher possible upside, equities analysts clearly believe Northwest Natural Gas is more favorable than Piedmont Natural Gas.

Dividends

Northwest Natural Gas pays an annual dividend of $1.88 per share and has a dividend yield of 3.0%. Piedmont Natural Gas pays an annual dividend of $1.36 per share and has a dividend yield of 2.3%. Northwest Natural Gas pays out 86.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Piedmont Natural Gas pays out 79.1% 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 increased its dividend for 38 consecutive years and Piedmont Natural Gas has increased its dividend for 61 consecutive years.

Volatility & Risk

Northwest Natural Gas has a beta of 0.42, meaning that its share price is 58% less volatile than the S&P 500. Comparatively, Piedmont Natural Gas has a beta of 0.87, meaning that its share price is 13% less volatile than the S&P 500.

Earnings and Valuation

This table compares Northwest Natural Gas and Piedmont Natural Gas’ top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Northwest Natural Gas $717.76 million 2.47 $255.20 million $2.18 28.44
Piedmont Natural Gas N/A N/A N/A $1.72 34.90

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

Profitability

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

Net Margins Return on Equity Return on Assets
Northwest Natural Gas 8.72% 7.57% 2.08%
Piedmont Natural Gas 19.00% 22.34% 6.57%

Summary

Northwest Natural Gas beats Piedmont Natural Gas on 7 of the 13 factors compared between the two stocks.

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.

About Piedmont Natural Gas

Piedmont Natural Gas Company, Inc. is an energy services company. The Company’s principal business is the distribution of natural gas to residential, commercial, industrial and power generation customers in portions of North Carolina, South Carolina and Tennessee, including customers served by municipalities, which are its wholesale customers. The Company operates through three segments: regulated utility, regulated non-utility activities and unregulated non-utility activities. The regulated utility segment includes operating a natural gas distribution system. The regulated non-utility activities segment consists of its equity method investments in regulated energy-related joint ventures that are held by its subsidiaries. The unregulated non-utility activities segment consists primarily of its equity method investment in an unregulated energy-related joint venture that is held by its subsidiary.

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