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Northwest Natural Gas (NWN)
NYSE:NWN
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Northwest Gas
(NYSE:NWN)
64Neutral
Positive Factors
Acquisitions
NWN's acquisition of SiEnergy is expected to boost customer growth significantly over the next five years.
Customer Growth
NWN reported 0.8% customer growth, which was above the forecast.
Negative Factors
Customer Growth Forecast
Forecasts for lower customer growth in NWN's core natural gas service territories in Oregon and Washington.
Debt Rating
S&P Global downgraded the debt rating on NWN to A-, from A.
Northwest Gas (NWN) vs. S&P 500 (SPY)
Market Cap
$1.66B
Dividend Yield4.74%
Average Volume (3M)263.71K
Price to Earnings (P/E)20.3
Beta (1Y)0.36
Revenue Growth-3.71%
EPS Growth-21.36%
CountryUS
Employees1,452
SectorUtilities
Sector Strength86
IndustryRegulated Gas
Share Statistics
EPS (TTM)2.03
Shares Outstanding40,238,495
10 Day Avg. Volume304,613
30 Day Avg. Volume263,714
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)1.44
Price to Cash Flow (P/CF)-12.80
P/FCF Ratio0.00
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$44.00Price Target Upside4.74% Upside
Rating ConsensusHold
Number of Analyst Covering4
Northwest Gas Business Overview & Revenue Model
Company DescriptionNorthwest Natural Holding Company, through its subsidiary, Northwest Natural Gas Company, provides regulated natural gas distribution services to residential, commercial, industrial, and transportation customers in Oregon and Southwest Washington. The company also operates 5.7 billion cubic feet of the Mist gas storage facility contracted to other utilities and third-party marketers; offers natural gas asset management services; and operates an appliance retail center. In addition, it engages in the gas storage, water, non-regulated renewable natural gas, and other investments and activities. The company provides natural gas service through approximately 786,000 meters in Oregon and southwest Washington; and water services to a total of approximately 80,000 people through approximately 33,000 water and wastewater connections in the Pacific Northwest and Texas. Northwest Natural Holding Company was founded in 1859 and is headquartered in Portland, Oregon.
How the Company Makes MoneyNorthwest Gas makes money primarily through the sale and distribution of natural gas to its customer base, which includes residential, commercial, and industrial sectors. The company generates revenue by charging for the natural gas consumed by its customers, based on metered usage. Additionally, NWN may earn income from service charges, connection fees, and maintenance services related to its energy infrastructure. The company may also engage in strategic partnerships or agreements with other energy providers and infrastructure companies to optimize its distribution network and expand its market reach. Regulatory frameworks and rate adjustments set by state utility commissions can also impact NWN's revenue by influencing the pricing structures for natural gas distribution.
Northwest Gas Financial Statement Overview
Summary
Northwest Gas demonstrates stable financial health with consistent revenue growth and profitability margins. The balance sheet reflects a sound financial position with stable leverage and improved equity ratios, while cash flow management shows resilience despite negative free cash flow due to high capital expenditures.Income Statement
Revenue growth has been positive over the years, but the absence of current revenue data for 2024 limits analysis. The net profit margin decreased slightly from 7.84% in 2022 to 7.84% in 2023, indicating stable profitability despite challenges. EBIT and EBITDA margins have shown consistency, suggesting efficient operational management.45
Neutral
Balance Sheet
The debt-to-equity ratio has stayed relatively stable over the years, decreasing slightly from 1.93 in 2019 to 1.26 in 2023, pointing to a manageable leverage level. The equity ratio improved from 25.27% in 2019 to 26.45% in 2023, indicating a stronger financial position. Return on equity increased from 7.13% in 2020 to 7.31% in 2023, showing improved shareholder returns.55
Neutral
Cash Flow
Operating cash flow has been relatively stable, with a slight decrease in 2024. Free cash flow remains negative, yet the operating cash flow to net income ratio improved over time, indicating better cash generation relative to profits. Capital expenditures have increased, impacting free cash flow negatively.60
Neutral
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 1.15B | 1.20B | 1.04B | 860.40M | 773.68M | Gross Profit |
| 397.61M | 423.87M | 341.23M | 329.12M | 300.50M | EBIT |
| 191.14M | 184.94M | 167.48M | 163.12M | 148.35M | EBITDA |
| 348.09M | 344.49M | 303.37M | 264.09M | 238.09M | Net Income Common Stockholders |
| 78.87M | 93.87M | 86.30M | 78.67M | 76.78M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 484.00K | 32.92M | 29.27M | 18.56M | 30.17M | Total Assets |
| 1.73B | 4.87B | 4.75B | 4.06B | 3.76B | Total Debt |
| 317.32M | 1.75B | 1.68B | 1.52B | 1.34B | Net Debt |
| 316.84M | 1.71B | 1.65B | 1.50B | 1.31B | Total Liabilities |
| 344.30M | 3.58B | 3.57B | 3.13B | 2.87B | Stockholders Equity |
| 1.39B | 1.28B | 1.18B | 935.15M | 888.73M |
| Cash Flow | Free Cash Flow | |||
| -194.12M | -47.40M | -191.69M | -134.90M | -137.87M | Operating Cash Flow |
| 200.28M | 279.95M | 147.67M | 160.35M | 143.02M | Investing Cash Flow |
| -428.99M | -335.50M | -435.46M | -300.12M | -294.28M | Financing Cash Flow |
| 227.06M | 64.21M | 301.63M | 131.44M | 171.78M |
Northwest Gas Technical Analysis
Positive
42.01
Price Trends
41.35
Positive
40.85
Positive
39.60
Positive
Market Momentum
-0.06
Positive
54.26
Neutral
49.83
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For NWN, the sentiment is Positive. The current price of 42.01 is above the 20-day moving average (MA) of 41.67, above the 50-day MA of 41.35, and above the 200-day MA of 39.60, indicating a bullish trend. The MACD of -0.06 indicates Positive momentum. The RSI at 54.26 is Neutral, neither overbought nor oversold. The STOCH value of 49.83 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for NWN.
Northwest Gas Risk Analysis
Northwest Gas disclosed 35 risk factors in its most recent earnings report. Northwest Gas reported the most risks in the “Production” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Northwest Gas Peers Comparison
Overall Rating
UnderperformOutperform
Sector (65)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
76 Outperform | $3.09B | 25.50 | 9.00% | 1.95% | 17.72% | 11.33% | |
75 Outperform | $4.38B | 18.19 | 7.76% | 4.10% | -3.96% | 11.40% | |
75 Outperform | $4.56B | 19.48 | 7.59% | 3.53% | -12.16% | -5.73% | |
66 Neutral | $4.88B | 14.67 | 15.15% | 3.70% | 9.18% | 36.67% | |
65 Neutral | $12.11B | 15.89 | 6.20% | 4.52% | 5.53% | -8.93% | |
64 Neutral | $1.66B | 20.33 | 5.91% | 4.74% | -3.71% | -21.36% | |
63 Neutral | $5.18B | 26.11 | 5.84% | 3.49% | -5.92% | 29.47% |
* Utilities Sector Average
Performance Comparison
NWN
Northwest Gas
42.01
8.21
24.29%
CPK
Chesapeake Utilities
134.23
36.68
37.60%
SR
Spire
76.30
20.76
37.38%
NJR
New Jersey Resources
48.70
8.96
22.55%
SWX
Southwest Gas
72.08
1.20
1.69%
OGS
ONE Gas
76.11
17.33
29.48%
Northwest Gas Earnings Call Summary
Earnings Call Date: Feb 28, 2025 | % Change Since: 2.11% | Next Earnings Date: May 6, 2025
Earnings Call Sentiment Positive
The call highlighted significant achievements such as the successful acquisition of C Energy, strong growth in the water and renewables segments, and a major rate case victory in Oregon. However, challenges such as regulatory lag affecting earnings, increased capital expenditures, and the impact of equity issuance on EPS were also noted.Highlights
Strong Growth in Water and Renewable Segments
Water and wastewater customer base grew at 4.6% in 2024, including both organic growth and acquisitions. Two renewable natural gas facilities with EDL went operational, providing steady cash flows and expected earnings for decades.
Successful Acquisition and Expansion Strategy
Acquired C Energy, a high-growth natural gas utility in Texas, which achieved a 22% customer growth rate from 2021 to 2024. Expected to continue double-digit growth.
Oregon Rate Case Success
Completed the largest Oregon gas utility rate case in history, increasing revenue requirement by $93.3 million and rate base by $334 million to $2.1 billion.
Positive Financial Guidance
Initiated 2025 adjusted earnings guidance of $2.75 to $2.95 per share with expected long-term earnings per share growth rate of 4% to 6% compounded annually.
Lowlights
Regulatory Lag Impact on Earnings
Net income decreased by $3.3 million compared to the previous year due to regulatory lag for the first ten months of 2024.
Increased Capital Expenditures
2025 capital expenditure guidance increased to $450 million to $500 million, largely due to C Energy integration, representing a nearly 40% increase in planned expenditures through 2030.
Equity Issuance Impact on Earnings Per Share
Earnings per share decreased due to the issuance of common stock during the year as part of long-term growth capital financing.
Company Guidance
During the Northwest Natural Holding Company Q4 2024 earnings call, the company provided detailed guidance for the upcoming year, projecting 2025 adjusted earnings between $2.75 and $2.95 per share. The guidance reflects strong contributions from its various business segments, including C Energy and Northwest Natural Water, each expected to contribute $0.25 to $0.30 at EPS over the year. The company also aims for a long-term earnings per share growth rate of 4% to 6% compounded annually from the 2025 adjusted EPS. Capital expenditure for 2025 is forecasted to range from $450 million to $500 million, with significant investments in gas utilities, including modernizing infrastructure and supporting growth in Texas. The company's CapEx trajectory through 2030 has increased by nearly 40%, now projected at $2.5 billion to $2.7 billion. Additionally, they anticipate consolidated customer growth of 2% to 2.5%, largely driven by C Energy's strong customer growth of over 20%. The financial strategy includes issuing $65 million to $75 million in common equity in 2025, lower than the previous year, and plans to refinance the C Energy acquisition term loan with junior subordinated notes to maintain a healthy investment-grade credit rating.Northwest Gas Corporate Events
M&A TransactionsDividendsBusiness Operations and StrategyFinancial Disclosures
Northwest Gas Reports 2024 Financial Results and Acquisitions
Neutral
Feb 28, 2025
Northwest Natural Holding Company reported its financial results for 2024, showing a decline in net income to $2.03 per share from $2.59 per share in 2023, primarily due to regulatory lag until new gas utility rates were effective in November 2024. The company completed the acquisition of SiEnergy, invested significantly in utility systems, and increased its dividend for the 69th consecutive year. Looking forward, NW Natural Holdings initiated 2025 earnings guidance and reaffirmed its long-term EPS growth target, while planning substantial capital expenditures to support infrastructure and service expansion.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.