Northwest Natural Gas (NYSE:NWN) versus Southwest Gas (NYSE:SWX) Head-To-Head Review

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

Dividends

Northwest Natural Gas pays an annual dividend of $1.96 per share and has a dividend yield of 4.7%. Southwest Gas pays an annual dividend of $2.48 per share and has a dividend yield of 3.2%. 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. Southwest Gas pays out 92.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Northwest Natural Gas has raised 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 Northwest Natural Gas and Southwest Gas’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Northwest Natural Gas	8.34%	8.60%	2.25%
Southwest Gas	4.06%	6.98%	2.20%

Analyst Recommendations

This is a summary of recent ratings for Northwest Natural Gas and Southwest Gas, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Northwest Natural Gas	0	2	1	0	2.33
Southwest Gas	0	2	2	1	2.80

Northwest Natural Gas currently has a consensus price target of $48.00, indicating a potential upside of 15.38%. Southwest Gas has a consensus price target of $81.25, indicating a potential upside of 3.61%. Given Northwest Natural Gas’ higher possible upside, analysts clearly believe Northwest Natural Gas is more favorable than Southwest Gas.

Institutional and Insider Ownership

75.1% of Northwest Natural Gas shares are held by institutional investors. Comparatively, 92.8% of Southwest Gas shares are held by institutional investors. 0.8% of Northwest Natural Gas shares are held by company insiders. Comparatively, 0.5% of Southwest Gas shares are held 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.

Earnings & Valuation

This table compares Northwest Natural Gas and Southwest Gas”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Northwest Natural Gas	$1.15 billion	1.45	$78.87 million	$2.53	16.44
Southwest Gas	$5.11 billion	1.10	$198.82 million	$2.68	29.26

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

Risk & Volatility

Northwest Natural Gas has a beta of 0.59, suggesting that its stock price is 41% less volatile than the S&P 500. Comparatively, Southwest Gas has a beta of 0.55, suggesting that its stock price is 45% less volatile than the S&P 500.

Summary

Northwest Natural Gas beats Southwest Gas on 10 of the 18 factors compared between the two stocks.

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.

About Southwest Gas

Southwest Gas Holdings, Inc., through its subsidiaries, distributes and transports natural gas in Arizona, Nevada, and California. The company operates through Natural Gas Distribution, Utility Infrastructure Services, and Pipeline and Storage segments. It also provides trenching, installation, and replacement of underground pipes, as well as maintenance services for energy distribution systems. As of December 31, 2023, it had 2,226,000 residential, commercial, industrial, and other natural gas customers. Southwest Gas Holdings, Inc. was incorporated in 1931 and is headquartered in Las Vegas, Nevada.