Gauging National Fuel Gas Company’s Risk Factors

National Fuel Gas Company (NFG) produces and distributes natural gas. The company has its headquarters in New York. It has been operating since 1902.

For the fourth quarter of Fiscal 2021, ended September 30, National Fuel reported an adjusted EPS of $0.95, up from $0.40 in the same quarter a year ago. The consensus estimate for the same stood at $0.88 per share. For full-year 2021, adjusted EPS rose to $4.29 from $2.92 a year ago.

The company has raised its Fiscal Year 2022 adjusted EPS outlook to a range of $5.05 to $5.45, which at the midpoint implies a 22% boost over the previous guidance.

NFG is undertaking an expansion and modernization project, which, once completed, is expected to boost its annual pipeline and storage segment revenue by about $50 million. National Fuel recently distributed a quarterly dividend of $0.46 per share. 

With this in mind, we used TipRanks to take a look at the company’s newly added risk factor.

Risk Factors

According to the new TipRanks Risk Factors tool, National Fuel’s main risk category is Finance and Corporate, representing 35% of the total 23 risks identified for the stock. Production and Legal and Regulatory are the next two major risk categories at 22% and 17%, respectively, of the total risks identified. The company recently updated its profile with one new Macro and Political risk factor.

Under the Macro and Political risk factor, NFG has informed investors that climate change may adversely impact its business. It mentions that severe weather events could damage its facilities and supply chain, which may result in increased operational costs and reduced revenue. National Fuel explains that if its regulated businesses are unable to recover the additional costs, then its future financial results could be adversely impacted. Further, the company mentions that shifts in climate patterns could adversely impact the demand for gas.

National Fuel also reminds investors that the steps being taken to curb climate change may adversely affect its business. It mentions that in 2021, the U.S. rejoined the Paris Agreement, which requires signatory countries to commit to greenhouse gas emissions reduction goals. As a result, the U.S. is targeting to reduce emissions up to 52% from 2005 levels by 2030. The company cautions that in this endeavor, the government could impose limitations on oil and gas production and establish a carbon tax. 

Further, the company cautions that fossil fuel-focused companies could face limited access to capital amid the shift to a low-carbon economy.

Finance and Corporate risk factor’s sector average is 34%, compared to National Fuel’s 35%. Shares of the company have gained about 49% over the past year.

Stock Rating

Recently, J.P. Morgan analyst Zach Parham reiterated a Hold rating on the stock with a price target of $62, which suggests 2.72% upside potential.

Consensus among analysts is a Hold based on 1 Buy, 1 Hold, and 1 Sell. The average National Fuel Gas Company price target of $65.67 implies 8.80% upside potential to current levels.

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