National Fuel Gas (NFG) & Piedmont Natural Gas (PNY) Critical Analysis

National Fuel Gas (NYSE: NFG) 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 risk, earnings, analyst recommendations, valuation, profitabiliy, dividends and institutional ownership.

Valuation & Earnings

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

	Gross Revenue	Price/Sales Ratio	EBITDA	Earnings Per Share	Price/Earnings Ratio
National Fuel Gas	$1.57 billion	3.22	$812.03 million	$3.21	18.43
Piedmont Natural Gas	N/A	N/A	N/A	$1.72	34.90

National Fuel Gas has higher revenue and earnings than Piedmont Natural Gas. National Fuel 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.

Risk & Volatility

National Fuel Gas has a beta of 0.97, indicating that its stock price is 3% less volatile than the S&P 500. Comparatively, Piedmont Natural Gas has a beta of 0.87, indicating that its stock price is 13% less volatile than the S&P 500.

Dividends

National Fuel Gas pays an annual dividend of $1.66 per share and has a dividend yield of 2.8%. Piedmont Natural Gas pays an annual dividend of $1.36 per share and has a dividend yield of 2.3%. National Fuel Gas pays out 51.7% of its earnings in the form of a dividend. 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. National Fuel Gas has increased its dividend for 46 consecutive years and Piedmont Natural Gas has increased its dividend for 38 consecutive years. National Fuel Gas is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Ratings

This is a summary of current ratings for National Fuel Gas and Piedmont Natural Gas, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
National Fuel Gas	0	4	0	0	2.00
Piedmont Natural Gas	0	0	0	0	N/A

National Fuel Gas currently has a consensus price target of $57.00, suggesting a potential downside of 3.65%. Given National Fuel Gas’ higher possible upside, equities research analysts clearly believe National Fuel Gas is more favorable than Piedmont Natural Gas.

Insider and Institutional Ownership

69.0% of National Fuel Gas shares are owned by institutional investors. Comparatively, 61.5% of Piedmont Natural Gas shares are owned by institutional investors. 2.6% of National Fuel Gas shares are owned by insiders. Comparatively, 1.4% of Piedmont Natural Gas shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
National Fuel Gas	17.38%	18.61%	5.17%
Piedmont Natural Gas	19.00%	22.34%	6.57%

Summary

National Fuel Gas beats Piedmont Natural Gas on 9 of the 12 factors compared between the two stocks.

National Fuel Gas Company Profile

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.

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.