Analyzing Northwest Natural Gas (NYSE:NWN) & Atmos Energy (NYSE:ATO)

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

Insider and Institutional Ownership

90.2% of Atmos Energy shares are owned by institutional investors. Comparatively, 75.1% of Northwest Natural Gas shares are owned by institutional investors. 0.4% of Atmos Energy shares are owned by insiders. Comparatively, 0.6% of Northwest Natural Gas shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Volatility & Risk

Atmos Energy has a beta of 0.56, suggesting that its stock price is 44% less volatile than the S&P 500. Comparatively, Northwest Natural Gas has a beta of 0.41, suggesting that its stock price is 59% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for Atmos Energy and Northwest Natural Gas, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Atmos Energy	0	10	3	0	2.23
Northwest Natural Gas	0	4	5	1	2.70

Atmos Energy currently has a consensus price target of $183.36, suggesting a potential upside of 5.82%. Northwest Natural Gas has a consensus price target of $55.43, suggesting a potential upside of 7.15%. Given Northwest Natural Gas’ stronger consensus rating and higher probable upside, analysts plainly believe Northwest Natural Gas is more favorable than Atmos Energy.

Dividends

Atmos Energy pays an annual dividend of $4.00 per share and has a dividend yield of 2.3%. Northwest Natural Gas pays an annual dividend of $2.00 per share and has a dividend yield of 3.9%. Atmos Energy pays out 47.0% of its earnings in the form of a dividend. Northwest Natural Gas pays out 66.7% 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. Atmos Energy has increased its dividend for 41 consecutive years and Northwest Natural Gas has increased its dividend for 70 consecutive years. Northwest Natural Gas is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Atmos Energy	28.50%	9.67%	4.67%
Northwest Natural Gas	9.75%	8.33%	2.03%

Earnings & Valuation

This table compares Atmos Energy and Northwest Natural Gas”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Atmos Energy	$4.70 billion	6.23	$1.20 billion	$8.51	20.36
Northwest Natural Gas	$1.29 billion	1.69	$113.32 million	$3.00	17.24

Atmos Energy has higher revenue and earnings than Northwest Natural Gas. Northwest Natural Gas is trading at a lower price-to-earnings ratio than Atmos Energy, indicating that it is currently the more affordable of the two stocks.

Summary

Atmos Energy beats Northwest Natural Gas on 11 of the 18 factors compared between the two stocks.

About Atmos Energy

Atmos Energy Corporation, together with its subsidiaries, engages in the regulated natural gas distribution, and pipeline and storage businesses in the United States. It operates through two segments, Distribution, and Pipeline and Storage. The Distribution segment is involved in the regulated natural gas distribution and related sales operations in eight states. This segment distributes natural gas to approximately 3.3 million residential, commercial, public authority, and industrial customers; and owned 73,689 miles of underground distribution and transmission mains. The Pipeline and Storage segment engages in the pipeline and storage operations. This segment transports natural gas for third parties and manages five underground storage facilities in Texas; provides ancillary services customary to the pipeline industry, including parking arrangements, lending, and inventory sales; and owned 5,645 miles of gas transmission lines. Atmos Energy Corporation was founded in 1906 and is headquartered in Dallas, Texas.

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.