Contrasting UNITIL (UTL) & NorthWestern (NWE)

UNITIL (NYSE: UTL) and NorthWestern (NYSE:NWE) are both utilities companies, but which is the superior stock? We will contrast the two businesses based on the strength of their risk, earnings, dividends, analyst recommendations, institutional ownership, valuation and profitability.

Profitability

This table compares UNITIL and NorthWestern’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
UNITIL 7.09% 9.39% 2.45%
NorthWestern 12.44% 9.41% 2.89%

Dividends

UNITIL pays an annual dividend of $1.44 per share and has a dividend yield of 3.3%. NorthWestern pays an annual dividend of $2.10 per share and has a dividend yield of 3.9%. UNITIL pays out 72.0% of its earnings in the form of a dividend. NorthWestern pays out 63.4% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. UNITIL has increased its dividend for 3 consecutive years and NorthWestern has increased its dividend for 9 consecutive years. NorthWestern is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Risk and Volatility

UNITIL has a beta of 0.2, indicating that its share price is 80% less volatile than the S&P 500. Comparatively, NorthWestern has a beta of 0.38, indicating that its share price is 62% less volatile than the S&P 500.

Institutional and Insider Ownership

58.2% of UNITIL shares are owned by institutional investors. Comparatively, 93.6% of NorthWestern shares are owned by institutional investors. 2.5% of UNITIL shares are owned by company insiders. Comparatively, 1.3% of NorthWestern shares are owned by company 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.

Analyst Ratings

This is a breakdown of current ratings and price targets for UNITIL and NorthWestern, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
UNITIL 0 2 1 0 2.33
NorthWestern 3 1 0 0 1.25

UNITIL currently has a consensus target price of $48.67, indicating a potential upside of 11.09%. NorthWestern has a consensus target price of $54.67, indicating a potential upside of 2.74%. Given UNITIL’s stronger consensus rating and higher possible upside, research analysts clearly believe UNITIL is more favorable than NorthWestern.

Valuation & Earnings

This table compares UNITIL and NorthWestern’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
UNITIL $383.40 million 1.68 $27.10 million $2.00 21.91
NorthWestern $1.26 billion 2.06 $164.17 million $3.31 16.08

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

Summary

NorthWestern beats UNITIL on 12 of the 17 factors compared between the two stocks.

About UNITIL

Unitil Corporation is a public utility holding company. The Company’s principal business is the local distribution of electricity in the southeastern seacoast and state capital regions of New Hampshire and the greater Fitchburg area of north central Massachusetts and the local distribution of natural gas in southeastern New Hampshire, portions of southern Maine to the Lewiston-Auburn area and in the greater Fitchburg area of north central Massachusetts. Its segments include utility gas operations, utility electric operations and non-regulated. Its operations include natural gas operations; natural gas distribution utility operations; gas transmission pipeline operations; electric distribution utility operations, and non-regulated and other non-utility operations. As of December 31, 2016, it was engaged in the distribution of electricity and natural gas to approximately 184,200 customers throughout its service territories in the states of New Hampshire, Massachusetts and Maine.

About NorthWestern

NorthWestern Corporation, doing business as North-Western Energy, provides electricity and natural gas. The Company’s segments are Electric operations, Natural gas operations and All other. As of December 31, 2016, the Company provided electricity and natural gas to approximately 709,600 customers in Montana, South Dakota and Nebraska. It generates and distributes electricity in South Dakota; distributes natural gas in South Dakota and Nebraska, and generates and distributes electricity and distributes natural gas in Montana. Its regulated electric utility business in Montana includes generation, transmission and distribution. As of December 31, 2016, it provided retail electricity in 110 communities in South Dakota. Its regulated natural gas utility business in Montana includes production, storage, transmission and distribution. As of December 31, 2016, it provided natural gas to approximately 88,500 customers in 60 South Dakota communities and four Nebraska communities.

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