NorthWestern (NWE) versus The Competition Critical Review

NorthWestern (NYSE:NWE) is one of 28 publicly-traded companies in the “Electric & other services combined” industry, but how does it compare to its competitors? We will compare NorthWestern to related businesses based on the strength of its risk, valuation, institutional ownership, profitability, earnings, analyst recommendations and dividends.

Profitability

This table compares NorthWestern and its competitors’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
NorthWestern	11.67%	6.53%	2.38%
NorthWestern Competitors	7.13%	6.44%	2.70%

Volatility and Risk

NorthWestern has a beta of 0.45, suggesting that its stock price is 55% less volatile than the S&P 500. Comparatively, NorthWestern’s competitors have a beta of 0.57, suggesting that their average stock price is 43% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of current recommendations and price targets for NorthWestern and its competitors, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
NorthWestern	2	3	3	0	2.13
NorthWestern Competitors	478	2396	1798	8	2.29

NorthWestern presently has a consensus price target of $55.38, suggesting a potential upside of 6.74%. As a group, “Electric & other services combined” companies have a potential upside of 11.12%. Given NorthWestern’s competitors stronger consensus rating and higher probable upside, analysts clearly believe NorthWestern has less favorable growth aspects than its competitors.

Earnings & Valuation

This table compares NorthWestern and its competitors top-line revenue, earnings per share and valuation.

	Gross Revenue	Net Income	Price/Earnings Ratio
NorthWestern	$1.48 billion	$183.01 million	17.29
NorthWestern Competitors	$11.11 billion	$731.87 million	12.55

NorthWestern’s competitors have higher revenue and earnings than NorthWestern. NorthWestern is trading at a higher price-to-earnings ratio than its competitors, indicating that it is currently more expensive than other companies in its industry.

Insider & Institutional Ownership

96.1% of NorthWestern shares are held by institutional investors. Comparatively, 70.3% of shares of all “Electric & other services combined” companies are held by institutional investors. 0.9% of NorthWestern shares are held by company insiders. Comparatively, 7.8% of shares of all “Electric & other services combined” companies are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Dividends

NorthWestern pays an annual dividend of $2.56 per share and has a dividend yield of 4.9%. NorthWestern pays out 85.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. As a group, “Electric & other services combined” companies pay a dividend yield of 3.7% and pay out 65.3% of their earnings in the form of a dividend. NorthWestern has increased its dividend for 19 consecutive years.

Summary

NorthWestern competitors beat NorthWestern on 10 of the 15 factors compared.

About NorthWestern

NorthWestern Corporation, doing business as NorthWestern Energy, provides electricity and natural gas to residential, commercial, and various industrial customers. The company operates through three segments: Electric Utility Operations; Natural Gas Utility Operations; and Other. It generates, purchases, transmits, and distributes electricity; and produces, purchases, stores, transmits, and distributes natural gas, as well as owns municipal franchises to provide natural gas service in the communities. The company operates 6,597 miles of electric transmission and 18,534 miles of electric distribution lines with approximately 121 transmission and distribution substations; and 2,235 miles of natural gas transmission and 5,099 miles of natural gas distribution lines with approximately 135 city gate stations in Montana. It also operates 1,308 miles of electric transmission and 2,342 miles of electric distribution lines in South Dakota with approximately 121 transmission and distribution substations; and 55 miles of natural gas transmission and 2,545 miles of natural gas distribution lines in South Dakota and Nebraska. The company serves approximately 764,200 customers in Montana, South Dakota, Nebraska, and Yellowstone National Park. NorthWestern Corporation was incorporated in 1923 and is based in Sioux Falls, South Dakota.