Head to Head Comparison: NewJersey Resources (NYSE:NJR) & Northwest Natural Gas (NYSE:NWN)

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

Insider and Institutional 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 hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Earnings & Valuation

This table compares Northwest Natural Gas and NewJersey Resources”s gross 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	1.69	$113.32 million	$3.02	17.08
NewJersey Resources	$2.04 billion	2.70	$335.63 million	$3.62	14.98

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.

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	9.65%	8.23%	1.97%
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 3.7%. Northwest Natural Gas pays out 66.2% 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 raised its dividend for 70 consecutive years and NewJersey Resources has raised 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.

Analyst Recommendations

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

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Northwest Natural Gas	0	5	3	2	2.70
NewJersey Resources	0	2	4	1	2.86

Northwest Natural Gas presently has a consensus price target of $55.43, indicating a potential upside of 7.46%. NewJersey Resources has a consensus price target of $62.50, indicating a potential upside of 15.23%. Given NewJersey Resources’ stronger consensus rating and higher possible upside, analysts clearly believe NewJersey Resources is more favorable than Northwest Natural Gas.

Volatility and Risk

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

Summary

NewJersey Resources beats Northwest Natural Gas on 13 of the 18 factors compared between the two stocks.

About Northwest Natural Gas

Northwest Natural Gas, now organized as NW Natural Holdings, is a utility company whose principal business is the distribution of natural gas through its NW Natural subsidiary. The company serves residential, commercial and industrial customers in Oregon and southwest Washington. Founded in 1859 as the Portland Gas Light Company, the business has grown from a local gas provider into a regional utility. Its operations also include natural gas storage and, through subsidiaries, water and wastewater services.

About NewJersey Resources

New Jersey Resources Corporation is an energy services holding company headquartered in Wall, New Jersey. Through its subsidiaries, it distributes natural gas, provides energy-related services, and develops and operates clean energy and infrastructure assets. Its utility subsidiary, New Jersey Natural Gas, delivers natural gas to residential, commercial, and industrial customers in New Jersey. The company also provides natural gas supply and energy management services, operates natural gas storage and transportation assets, and offers home services such as heating, cooling, plumbing, and appliance repair.