Northwest Natural Holding Company NWN benefits from its investments in infrastructure upgrade, customer base expansion and energy transition plans. Given its earnings growth opportunities and better debt management, NWN makes for a solid investment option in the utility sector.

Let’s focus on the factors that make this Zacks Rank #2 (Buy) company a strong investment pick at the moment.

NWN’s Growth Projections & Surprise History

The Zacks Consensus Estimate for 2024 earnings per share (EPS) has moved up 1.8% in the past 60 days to $2.32.

The Zacks Consensus Estimate for 2024 sales is pinned at $1.21 billion, indicating a year-over-year increase of 0.7%.

Northwest Natural delivered an average earnings surprise of 8.7% in the trailing four quarters.

NWN’s Debt Position

Currently, the company’s total debt to capital is 55.13%, better than the sector’s average of 59.62%.

The time-to-interest earned ratio at the end of the second quarter was 2.4. The ratio, being greater than one, reflects the company’s ability to meet future interest obligations without difficulties.

NWN’s Dividend Growth

Northwest Natural has been increasing shareholder value by paying dividends. It has been increasing its dividends for the past 68 years. Currently, its quarterly dividend is 48.75 cents per share, resulting in an annualized dividend of $1.95 per share. The company’s current dividend yield is 5.01%, better than the Zacks S&P 500 composite’s 1.31%. 

NWN’s Customer Growth

Northwest Natural is experiencing strong customer growth, which will continue to boost demand for its services. The company anticipates its Gas utility customers to continue to expand 0.8% per year over the next five years. Its water & wastewater utilities are likely to witness organic customer growth of 2.5-3% per year during the same period.

NWN’s Systematic Investment Plans

Northwest Natural continues to follow a systematic capital investment plan for infrastructure development and maintains the reliability of its gas and water delivery systems. The company’s gas utility has a capital expenditure plan of $1.4-$1.6 billion for the next five years. It also has a capital plan of $120-$140 million for system improvements in water & wastewater utilities.

NWN’s Stock Price Performance

In the past three months, shares of the company have risen 8.8% compared with the industry’s 8.2% growth.

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Other Stocks to Consider

A few other top-ranked stocks from the same sector are UGI Corporation UGI, NiSource NI and Xcel Energy XEL, each holding a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for UGI’s fiscal 2024 EPS indicates a year-over-year improvement of 3.2%. The company delivered an average earnings surprise of 99.1% in the trailing four quarters.

NI’s long-term (three to five year) earnings growth rate is 6%. It delivered an average earnings surprise of 20.6% in the past four quarters.

XEL’s long-term (three to five year) earnings growth rate is 6.39%. The Zacks Consensus Estimate for XEL’s 2024 EPS indicates a year-over-year improvement of 6%.

 

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