Reviewing Northwest Natural Gas (NWN) & WGL Holdings (WGL)

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

Volatility and Risk

WGL Holdings has a beta of 0.69, indicating that its share price is 31% less volatile than the S&P 500. Comparatively, Northwest Natural Gas has a beta of 0.42, indicating that its share price is 58% less volatile than the S&P 500.

Analyst Recommendations

This is a summary of recent ratings for WGL Holdings and Northwest Natural Gas, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
WGL Holdings 0 4 0 0 2.00
Northwest Natural Gas 0 2 1 0 2.33

WGL Holdings currently has a consensus target price of $71.00, suggesting a potential downside of 15.95%. Northwest Natural Gas has a consensus target price of $75.00, suggesting a potential upside of 13.90%. Given Northwest Natural Gas’ stronger consensus rating and higher probable upside, analysts plainly believe Northwest Natural Gas is more favorable than WGL Holdings.

Valuation and Earnings

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

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
WGL Holdings $2.39 billion 1.81 $465.84 million $3.51 24.07
Northwest Natural Gas $754.82 million 2.50 $257.76 million $2.21 29.80

WGL Holdings has higher revenue and earnings than Northwest Natural Gas. WGL Holdings 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.

Dividends

WGL Holdings pays an annual dividend of $2.04 per share and has a dividend yield of 2.4%. Northwest Natural Gas pays an annual dividend of $1.88 per share and has a dividend yield of 2.9%. WGL Holdings pays out 58.1% of its earnings in the form of a dividend. 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. WGL Holdings has raised its dividend for 61 consecutive years and Northwest Natural Gas has raised its dividend for 40 consecutive years.

Insider and Institutional Ownership

69.1% of WGL Holdings shares are held by institutional investors. Comparatively, 63.3% of Northwest Natural Gas shares are held by institutional investors. 1.0% of WGL Holdings shares are held by company insiders. Comparatively, 1.5% of Northwest Natural Gas shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Profitability

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

Net Margins Return on Equity Return on Assets
WGL Holdings 7.60% 11.76% 2.73%
Northwest Natural Gas 8.38% 7.51% 2.08%

Summary

WGL Holdings beats Northwest Natural Gas on 9 of the 17 factors compared between the two stocks.

WGL Holdings Company Profile

WGL Holdings, Inc. (WGL) is a holding company. The Company operates through four segments. The Regulated Utility segment consists of Washington Gas Light Company, which provides regulated gas distribution services to end use customers and natural gas transportation services to an unaffiliated natural gas distribution company and Hampshire Gas Company, which provides regulated interstate natural gas storage services. The Retail Energy-Marketing segment consists of the operations of WGL Energy Services, Inc., which sells natural gas and electricity directly to retail customers. The Commercial Energy Systems segment consists of the operations of WGL Energy Systems, Inc., WGSW, Inc. and the results of operations of affiliate-owned commercial distributed energy projects. The Midstream Energy Services segment consists of the operations of WGL Midstream, Inc., which engages in acquiring, investing in, managing and optimizing natural gas storage and transportation assets.

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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