Contrasting NorthWestern (NWE) and Its Competitors

NorthWestern (NYSE:NWE) is one of 24 publicly-traded companies in the “Electric & other services combined” industry, but how does it weigh in compared to its peers? We will compare NorthWestern to related businesses based on the strength of its risk, valuation, analyst recommendations, earnings, dividends, profitability and institutional ownership.

Insider and Institutional Ownership

96.1% of NorthWestern shares are owned by institutional investors. Comparatively, 68.9% of shares of all “Electric & other services combined” companies are owned by institutional investors. 0.9% of NorthWestern shares are owned by insiders. Comparatively, 9.4% of shares of all “Electric & other services combined” companies are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Analyst Recommendations

This is a breakdown of recent ratings for NorthWestern and its peers, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
NorthWestern	2	3	3	0	2.13
NorthWestern Competitors	423	1846	1396	7	2.27

NorthWestern currently has a consensus target price of $55.38, indicating a potential upside of 9.96%. As a group, “Electric & other services combined” companies have a potential upside of 16.27%. Given NorthWestern’s peers stronger consensus rating and higher possible upside, analysts plainly believe NorthWestern has less favorable growth aspects than its peers.

Profitability

This table compares NorthWestern and its peers’ 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	6.14%	5.70%	2.68%

Earnings & Valuation

This table compares NorthWestern and its peers gross revenue, earnings per share and valuation.

	Gross Revenue	Net Income	Price/Earnings Ratio
NorthWestern	$1.51 billion	$183.01 million	16.79
NorthWestern Competitors	$11.10 billion	$663.74 million	8.80

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

Risk & Volatility

NorthWestern has a beta of 0.45, indicating that its share price is 55% less volatile than the S&P 500. Comparatively, NorthWestern’s peers have a beta of 0.75, indicating that their average share price is 25% less volatile than the S&P 500.

Dividends

NorthWestern pays an annual dividend of $2.56 per share and has a dividend yield of 5.1%. 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 4.2% and pay out 70.8% of their earnings in the form of a dividend. NorthWestern has raised its dividend for 19 consecutive years.

Summary

NorthWestern peers 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.