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

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 2.00% 1.26% 0.36%
WGL Holdings 7.60% 11.76% 2.73%

Risk and Volatility

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

Institutional & Insider Ownership

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

Analyst Ratings

This is a breakdown of recent ratings and target prices 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 0 4 0 0 2.00

Northwest Natural Gas presently has a consensus price target of $75.00, suggesting a potential upside of 13.46%. WGL Holdings has a consensus price target of $71.00, suggesting a potential downside of 15.56%. Given Northwest Natural Gas’ stronger consensus rating and higher probable upside, equities analysts clearly believe Northwest Natural Gas is more favorable than WGL Holdings.

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 2.51 $257.76 million $2.21 29.91
WGL Holdings $2.39 billion 1.80 $465.84 million $3.51 23.95

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.

Dividends

Northwest Natural Gas pays an annual dividend of $1.88 per share and has a dividend yield of 2.8%. 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.

Summary

WGL Holdings beats Northwest Natural Gas on 10 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.

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