Reviewing Sempra Energy (NYSE:SRE) and Northwest Natural Gas (NYSE:NWN)

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

Analyst Ratings

This is a summary of recent recommendations for Sempra Energy and Northwest Natural Gas, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Sempra Energy	0	6	7	0	2.54
Northwest Natural Gas	0	2	1	0	2.33

Sempra Energy presently has a consensus price target of $82.33, suggesting a potential upside of 1.57%. Northwest Natural Gas has a consensus price target of $48.00, suggesting a potential upside of 14.86%. Given Northwest Natural Gas’ higher probable upside, analysts clearly believe Northwest Natural Gas is more favorable than Sempra Energy.

Institutional & Insider Ownership

89.7% of Sempra Energy shares are owned by institutional investors. Comparatively, 75.1% of Northwest Natural Gas shares are owned by institutional investors. 0.3% of Sempra Energy shares are owned by company insiders. Comparatively, 0.9% of Northwest Natural Gas shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Risk and Volatility

Sempra Energy has a beta of 0.65, suggesting that its share price is 35% less volatile than the S&P 500. Comparatively, Northwest Natural Gas has a beta of 0.59, suggesting that its share price is 41% less volatile than the S&P 500.

Valuation and Earnings

This table compares Sempra 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
Sempra Energy	$13.34 billion	3.97	$2.86 billion	$4.14	19.58
Northwest Natural Gas	$1.24 billion	1.36	$78.87 million	$2.53	16.52

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Sempra Energy	20.28%	8.42%	3.17%
Northwest Natural Gas	8.34%	8.60%	2.25%

Dividends

Sempra Energy pays an annual dividend of $2.58 per share and has a dividend yield of 3.2%. Northwest Natural Gas pays an annual dividend of $1.96 per share and has a dividend yield of 4.7%. Sempra Energy pays out 62.3% of its earnings in the form of a dividend. Northwest Natural Gas pays out 77.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Sempra Energy has increased its dividend for 22 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.

Summary

Sempra Energy beats Northwest Natural Gas on 12 of the 17 factors compared between the two stocks.

About Sempra Energy

Sempra operates as an energy infrastructure company in the United States and internationally. It operates through three segments: Sempra California, Sempra Texas Utilities, and Sempra Infrastructure. The Sempra California segment provides electric services; and natural gas services to San Diego County. As of December 31, 2023, it offered electric services to approximately 3.6 million population and natural gas services to approximately 3.3 million population that covers 4,100 square miles. This segment owns and operates a natural gas distribution, transmission, and storage system that supplies natural gas. As of December 31, 2023, it serves a population of 21 million covering an area of 24,000 square miles. The Sempra Texas Utilities segment engages in the regulated electricity transmission and distribution. As of December 31, 2023, its transmission system included 18,298 circuit miles of transmission lines; 1,257 transmission and distribution substations; interconnection to 173 third-party generation facilities totaling 54,277 MW; and distribution system included approximately 4.0 million points of delivery and consisted of 125,116 miles of overhead and underground lines. The Sempra Infrastructure segment develops, builds, operates, and invests in energy infrastructure to help enable the energy transition in North American markets and worldwide. The company was formerly known as Sempra Energy and changed its name to Sempra in May 2023. Sempra was incorporated in 1996 and is based in San Diego, California.

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.