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

Profitability

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

Net Margins Return on Equity Return on Assets
NorthWestern 12.44% 9.41% 2.89%
Atlantic Power -14.09% 34.66% 1.25%

Volatility and Risk

NorthWestern has a beta of 0.38, indicating that its stock price is 62% less volatile than the S&P 500. Comparatively, Atlantic Power has a beta of 1.73, indicating that its stock price is 73% more volatile than the S&P 500.

Insider & Institutional Ownership

93.6% of NorthWestern shares are owned by institutional investors. Comparatively, 47.7% of Atlantic Power shares are owned by institutional investors. 1.3% of NorthWestern shares are owned by company insiders. Comparatively, 1.6% of Atlantic Power shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Analyst Ratings

This is a summary of current ratings and recommmendations for NorthWestern and Atlantic Power, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
NorthWestern 3 1 0 0 1.25
Atlantic Power 0 2 0 0 2.00

NorthWestern presently has a consensus target price of $54.67, suggesting a potential downside of 2.75%. Atlantic Power has a consensus target price of $2.48, suggesting a potential upside of 7.61%. Given Atlantic Power’s stronger consensus rating and higher possible upside, analysts clearly believe Atlantic Power is more favorable than NorthWestern.

Dividends

NorthWestern pays an annual dividend of $2.10 per share and has a dividend yield of 3.7%. Atlantic Power does not pay a dividend. NorthWestern pays out 63.4% of its earnings in the form of a dividend. Atlantic Power has increased its dividend for 9 consecutive years.

Valuation & Earnings

This table compares NorthWestern and Atlantic Power’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
NorthWestern $1.26 billion 2.17 $164.17 million $3.31 16.98
Atlantic Power $399.20 million 0.66 -$113.90 million ($0.55) -4.18

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

Summary

NorthWestern beats Atlantic Power on 9 of the 16 factors compared between the two stocks.

NorthWestern Company Profile

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.

Atlantic Power Company Profile

Atlantic Power Corporation (Atlantic Power) owns and operates a fleet of power generation assets in the United States and Canada. The Company’s power generation projects sell electricity to utilities and other commercial customers. Atlantic Power’s segments include East U.S., West U.S. and Canada. The Company’s East U.S. segment comprises natural gas, biomass, coal and hydro projects. The Company’s projects under the West U.S. segment include Naval Station, Naval Training Center, North Island, Oxnard, Manchief and Frederickson, which are focused on natural gas, and Koma Kulshan, which is focused on hydro. Under the Canada segment, the Company’s projects located in British Columbia include Mamquam, Mamquam and Williams Lake. Its Calstock and Tunis projects are located in Ontario. The Company’s portfolio consisted of interests in 19 operational power generation projects across nine states in the United States and two provinces in Canada, as of December 31, 2016.

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