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

Earnings and Valuation

This table compares Vectren Corporation and Northwest Natural Gas’ revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Vectren Corporation $2.59 billion 2.10 $668.60 million $2.70 24.30
Northwest Natural Gas $754.82 million 2.52 $257.76 million $2.21 30.00

Vectren Corporation has higher revenue and earnings than Northwest Natural Gas. Vectren Corporation 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.

Risk & Volatility

Vectren Corporation has a beta of 0.81, meaning that its stock price is 19% less volatile than the S&P 500. Comparatively, Northwest Natural Gas has a beta of 0.43, meaning that its stock price is 57% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Vectren Corporation and Northwest Natural Gas, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Vectren Corporation 0 0 3 0 3.00
Northwest Natural Gas 0 2 1 0 2.33

Vectren Corporation currently has a consensus price target of $66.00, indicating a potential upside of 0.59%. Northwest Natural Gas has a consensus price target of $75.00, indicating a potential upside of 13.12%. Given Northwest Natural Gas’ higher probable upside, analysts plainly believe Northwest Natural Gas is more favorable than Vectren Corporation.

Dividends

Vectren Corporation pays an annual dividend of $1.68 per share and has a dividend yield of 2.6%. Northwest Natural Gas pays an annual dividend of $1.88 per share and has a dividend yield of 2.8%. Vectren Corporation pays out 62.2% 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. Vectren Corporation has increased its dividend for 57 consecutive years and Northwest Natural Gas has increased its dividend for 61 consecutive years. Northwest Natural Gas is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Insider and Institutional Ownership

63.8% of Vectren Corporation shares are owned by institutional investors. Comparatively, 63.3% of Northwest Natural Gas shares are owned by institutional investors. 0.1% of Vectren Corporation shares are owned by company insiders. Comparatively, 1.5% of Northwest Natural Gas shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Profitability

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

Net Margins Return on Equity Return on Assets
Vectren Corporation 8.66% 12.65% 3.90%
Northwest Natural Gas 8.38% 7.51% 2.08%

Summary

Vectren Corporation beats Northwest Natural Gas on 11 of the 17 factors compared between the two stocks.

About Vectren Corporation

Vectren Corporation (Vectren) is an energy holding company. The Company segregates its operations into groups, including the Utility Group, the Nonutility Group, and Corporate and Other. The Company’s subsidiary, Vectren Utility Holdings, Inc. (Utility Holdings or VUHI), serves as the intermediate holding company for three public utilities: Indiana Gas Company, Inc. (Indiana Gas), Southern Indiana Gas and Electric Company (SIGECO) and Vectren Energy Delivery of Ohio, Inc. (VEDO). The Company, through Vectren Enterprises Inc. (Enterprises), is involved in non-utility activities in two primary business areas: Infrastructure Services and Energy Services. Infrastructure Services provides underground pipeline construction and repair services. Energy Services provides energy performance contracting and sustainable infrastructure, such as renewables, distributed generation, and combined heat and power projects.

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.

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