Financial Comparison: Northwest Natural Gas (NWN) vs. WGL Holdings (WGL)

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

Earnings & Valuation

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

	Gross Revenue	Price/Sales Ratio	EBITDA	Earnings Per Share	Price/Earnings Ratio
Northwest Natural Gas	$754.82 million	2.50	$257.76 million	$2.21	29.75
WGL Holdings	$2.39 billion	1.80	$465.84 million	$3.51	23.87

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.

Profitability

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

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

Volatility and Risk

Northwest Natural Gas has a beta of 0.43, suggesting that its stock price is 57% less volatile than the S&P 500. Comparatively, WGL Holdings has a beta of 0.67, suggesting that its stock price is 33% less volatile than the S&P 500.

Dividends

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

Analyst Recommendations

This is a breakdown of current ratings and price targets for Northwest Natural Gas and WGL Holdings, 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
WGL Holdings	1	3	0	0	1.75

Northwest Natural Gas currently has a consensus price target of $75.00, suggesting a potential upside of 14.07%. WGL Holdings has a consensus price target of $71.00, suggesting a potential downside of 15.27%. Given Northwest Natural Gas’ stronger consensus rating and higher possible upside, research analysts plainly believe Northwest Natural Gas is more favorable than WGL Holdings.

Insider & Institutional Ownership

63.3% of Northwest Natural Gas shares are owned by institutional investors. Comparatively, 69.1% of WGL Holdings shares are owned by institutional investors. 1.5% of Northwest Natural Gas shares are owned by insiders. Comparatively, 1.0% of WGL Holdings 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.

Summary

WGL Holdings beats Northwest Natural Gas on 9 of the 17 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 WGL Holdings

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.