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

Insider & Institutional Ownership

61.5% of Piedmont Natural Gas shares are owned by institutional investors. Comparatively, 63.6% of Northwest Natural Gas shares are owned by institutional investors. 1.4% of Piedmont Natural Gas shares are owned by insiders. Comparatively, 1.5% of Northwest Natural Gas shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Profitability

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

Net Margins Return on Equity Return on Assets
Piedmont Natural Gas 19.00% 22.34% 6.57%
Northwest Natural Gas 8.38% 7.51% 2.08%

Valuation and Earnings

This table compares Piedmont Natural Gas and Northwest Natural Gas’ gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Piedmont Natural Gas N/A N/A N/A $1.72 34.90
Northwest Natural Gas $754.82 million 2.46 $257.76 million $2.21 29.30

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.

Analyst Recommendations

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

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

Northwest Natural Gas has a consensus target price of $75.00, suggesting a potential upside of 15.83%. Given Northwest Natural Gas’ higher possible upside, analysts plainly believe Northwest Natural Gas is more favorable than Piedmont Natural Gas.

Dividends

Piedmont Natural Gas pays an annual dividend of $1.36 per share and has a dividend yield of 2.3%. Northwest Natural Gas pays an annual dividend of $1.88 per share and has a dividend yield of 2.9%. 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 pays out 85.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Piedmont Natural Gas has raised its dividend for 38 consecutive years and Northwest Natural Gas has raised its dividend for 61 consecutive years. Northwest Natural Gas is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Risk & Volatility

Piedmont Natural Gas has a beta of 0.87, suggesting that its share price is 13% less volatile than the S&P 500. Comparatively, Northwest Natural Gas has a beta of 0.43, suggesting that its share price is 57% less volatile than the S&P 500.

Summary

Northwest Natural Gas beats Piedmont Natural Gas on 8 of the 13 factors compared between the two stocks.

Piedmont Natural Gas Company Profile

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.

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.

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