Financial Survey: NiSource (NYSE:NI) versus NorthWestern (NYSE:NWE)

NorthWestern (NYSE:NWE) and NiSource (NYSE:NI) are both utilities companies, but which is the better stock? We will contrast the two businesses based on the strength of their analyst recommendations, institutional ownership, profitability, valuation, risk, dividends and earnings.

Earnings & Valuation

This table compares NorthWestern and NiSource’s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
NorthWestern	$1.51 billion	2.04	$183.01 million	$3.00	17.04
NiSource	$5.85 billion	1.94	$804.10 million	$1.44	19.03

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

Volatility and Risk

NorthWestern has a beta of 0.45, meaning that its stock price is 55% less volatile than the S&P 500. Comparatively, NiSource has a beta of 0.48, meaning that its stock price is 52% less volatile than the S&P 500.

Analyst Ratings

This is a summary of current recommendations for NorthWestern and NiSource, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
NorthWestern	2	3	3	0	2.13
NiSource	0	0	4	0	3.00

NorthWestern currently has a consensus target price of $55.38, suggesting a potential upside of 8.30%. NiSource has a consensus target price of $30.00, suggesting a potential upside of 9.45%. Given NiSource’s stronger consensus rating and higher possible upside, analysts plainly believe NiSource is more favorable than NorthWestern.

Profitability

This table compares NorthWestern and NiSource’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
NorthWestern	11.67%	6.53%	2.38%
NiSource	12.00%	10.90%	2.58%

Institutional & Insider Ownership

96.1% of NorthWestern shares are owned by institutional investors. Comparatively, 94.9% of NiSource shares are owned by institutional investors. 0.9% of NorthWestern shares are owned by insiders. Comparatively, 0.2% of NiSource shares are owned by 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.

Dividends

NorthWestern pays an annual dividend of $2.56 per share and has a dividend yield of 5.0%. NiSource pays an annual dividend of $1.00 per share and has a dividend yield of 3.6%. 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. NiSource pays out 69.4% of its earnings in the form of a dividend. NorthWestern has increased its dividend for 19 consecutive years and NiSource has increased its dividend for 8 consecutive years. NorthWestern is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

NiSource beats NorthWestern on 11 of the 17 factors compared between the two stocks.

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.

About NiSource

NiSource Inc., an energy holding company, operates as a regulated natural gas and electric utility company in the United States. It operates through two segments, Gas Distribution Operations and Electric Operations. The company distributes natural gas to approximately 859,000 customers in northern Indiana, as well as approximately 2.4 million residential, commercial, and industrial customers in Ohio, Pennsylvania, Virginia, Kentucky, and Maryland. It operates approximately 54,800 miles of distribution main pipelines, as well as associated individual customer service lines; and 1,000 miles of transmission main pipelines. The company generates, transmits, and distributes electricity to approximately 486,000 customers in 20 counties in the northern part of Indiana, as well as engages in wholesale electric and transmission transactions. It owns and operates coal-fired electric generating stations with a capacity of 722 megawatts (MW) in Wheatfield and 455 MW in Michigan City; combined cycle gas turbine with a capacity of 563 MW in West Terre Haute; natural gas generating units with a capacity of 155 MW in Wheatfield; hydro generating plants with a capacity of 9 MW in Carroll County and 7 MW in White County; and wind generating units with a capacity of 102 MW and 302 MW in White County, Indiana. The company was formerly known as NIPSCO Industries, Inc. and changed its name to NiSource Inc. in April 1999. NiSource Inc. was founded in 1847 and is headquartered in Merrillville, Indiana.