NewJersey Resources (NYSE:NJR) & Northwest Natural Gas (NYSE:NWN) Financial Analysis

Northwest Natural Gas (NYSE:NWN) and NewJersey Resources (NYSE:NJR) are both mid-cap utilities companies, but which is the better business? We will compare the two businesses based on the strength of their dividends, profitability, valuation, analyst recommendations, institutional ownership, earnings and risk.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Northwest Natural Gas	9.75%	8.33%	2.03%
NewJersey Resources	16.42%	14.46%	4.67%

Dividends

Northwest Natural Gas pays an annual dividend of $2.00 per share and has a dividend yield of 3.9%. NewJersey Resources pays an annual dividend of $2.00 per share and has a dividend yield of 3.6%. Northwest Natural Gas pays out 66.7% of its earnings in the form of a dividend. NewJersey Resources pays out 55.2% 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. Northwest Natural Gas has increased its dividend for 70 consecutive years and NewJersey Resources has increased its dividend for 29 consecutive years. Northwest Natural Gas is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Institutional & Insider Ownership

75.1% of Northwest Natural Gas shares are held by institutional investors. Comparatively, 71.0% of NewJersey Resources shares are held by institutional investors. 0.6% of Northwest Natural Gas shares are held by insiders. Comparatively, 0.7% of NewJersey Resources shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Volatility & Risk

Northwest Natural Gas has a beta of 0.41, meaning that its stock price is 59% less volatile than the S&P 500. Comparatively, NewJersey Resources has a beta of 0.45, meaning that its stock price is 55% less volatile than the S&P 500.

Valuation and Earnings

This table compares Northwest Natural Gas and NewJersey Resources”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Northwest Natural Gas	$1.29 billion	1.68	$113.32 million	$3.00	17.12
NewJersey Resources	$2.04 billion	2.74	$335.63 million	$3.62	15.21

NewJersey Resources has higher revenue and earnings than Northwest Natural Gas. NewJersey Resources 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.

Analyst Recommendations

This is a breakdown of current recommendations for Northwest Natural Gas and NewJersey Resources, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Northwest Natural Gas	0	4	5	1	2.70
NewJersey Resources	0	2	4	1	2.86

Northwest Natural Gas currently has a consensus price target of $54.86, suggesting a potential upside of 6.81%. NewJersey Resources has a consensus price target of $62.50, suggesting a potential upside of 13.51%. Given NewJersey Resources’ stronger consensus rating and higher probable upside, analysts plainly believe NewJersey Resources is more favorable than Northwest Natural Gas.

Summary

NewJersey Resources beats Northwest Natural Gas on 12 of the 17 factors compared between the two stocks.

About Northwest Natural Gas

Northwest Natural Holding Company, through its subsidiary, Northwest Natural Gas Company, provides regulated natural gas distribution services to residential, commercial, and industrial customers in the United States. The company operates a mist gas storage facility contracted to other utilities, third-party marketers, and electric generators; offers natural gas asset management services; and operates an appliance retail center. It also engages in gas storage, water and wastewater, non-regulated renewable natural gas, and other investment businesses. In addition, the company provides natural gas service in Oregon and southwest Washington; and water and wastewater connections. Northwest Natural Holding Company was founded in 1859 and is headquartered in Portland, Oregon.

About NewJersey Resources

New Jersey Resources Corporation, an energy services holding company, distributes natural gas. The company operates through four segments: Natural Gas Distribution, Clean Energy Ventures, Energy Services, and Storage and Transportation. The Natural Gas Distribution segment offers regulated natural gas utility services to approximately 576,000 customers in Burlington, Middlesex, Monmouth, Morris, Ocean, and Sussex counties in New Jersey; provides capacity and storage management services; and participates in the off-system sales and capacity release markets. The Clean Energy Ventures segment invests in, owns, and operates clean energy projects, including commercial and residential solar installation situated in New Jersey, Rhode Island, New York, Connecticut, Michigan, and Indiana. The Energy Services segment maintains and operates natural gas transportation and storage capacity contracts, as well as provides physical wholesale energy, retail energy and energy management services in the United States and Canada. The Storage and Transportation segment invests in invests in energy-related ventures. It provides heating, ventilation, and cooling services; sales and installation of appliances; offers solar equipment installation, and plumbing repair and installation services; and holds commercial real estate properties. The company was incorporated in 1981 and is headquartered in Wall, New Jersey.