Contrasting Northwest Natural Gas (NYSE:NWN) & MDU Resources Group (NYSE:MDU)

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

Insider and Institutional Ownership

75.1% of Northwest Natural Gas shares are owned by institutional investors. Comparatively, 71.4% of MDU Resources Group shares are owned by institutional investors. 0.9% of Northwest Natural Gas shares are owned by company insiders. Comparatively, 0.9% of MDU Resources Group shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Profitability

This table compares Northwest Natural Gas and MDU Resources Group’s 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%
MDU Resources Group	8.25%	8.29%	3.20%

Dividends

Northwest Natural Gas pays an annual dividend of $1.96 per share and has a dividend yield of 4.2%. MDU Resources Group pays an annual dividend of $0.56 per share and has a dividend yield of 2.9%. 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. MDU Resources Group pays out 52.8% of its earnings in the form of a dividend. Northwest Natural Gas has increased its dividend for 70 consecutive years and MDU Resources Group has increased its dividend for 1 consecutive years. Northwest Natural Gas is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Recommendations

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

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Northwest Natural Gas	0	3	1	1	2.60
MDU Resources Group	1	3	3	0	2.29

Northwest Natural Gas currently has a consensus target price of $49.67, indicating a potential upside of 7.39%. MDU Resources Group has a consensus target price of $19.50, indicating a potential upside of 0.48%. Given Northwest Natural Gas’ stronger consensus rating and higher possible upside, research analysts clearly believe Northwest Natural Gas is more favorable than MDU Resources Group.

Volatility and Risk

Northwest Natural Gas has a beta of 0.57, indicating that its stock price is 43% less volatile than the S&P 500. Comparatively, MDU Resources Group has a beta of 0.7, indicating that its stock price is 30% less volatile than the S&P 500.

Earnings & Valuation

This table compares Northwest Natural Gas and MDU Resources Group”s top-line 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	1.62	$78.87 million	$2.53	18.28
MDU Resources Group	$1.85 billion	2.14	$281.11 million	$1.06	18.31

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

MDU Resources Group, Inc. engages in the regulated energy delivery, and construction materials and services businesses in the United States. It operates through four segments: Electric, Natural Gas Distribution, Pipeline, and Construction Services. The Electric segment generates, transmits, and distributes electricity for residential, commercial, industrial, and municipal customers in Montana, North Dakota, South Dakota, and Wyoming; and operates 3,400 miles of transmission lines, 4,800 miles of distribution lines, and 82 transmission and 298 distribution substations. The Natural Gas Distribution segment distributes natural gas for residential, commercial, and industrial customers in Idaho, Minnesota, Montana, North Dakota, Oregon, South Dakota, Washington, and Wyoming; and supplies related value-added services. The Pipeline segment provides natural gas transportation and underground storage services through a regulated pipeline system primarily in the Rocky Mountain and northern Great Plains regions; and cathodic protection and other energy-related services. The Construction Services segment offers electrical and mechanical contracting services, including the construction and maintenance of electrical and communication wiring and infrastructure, fire suppression systems, mechanical piping, and services; transmission and distribution contracting services, comprise construction and maintenance of overhead and underground electrical, and gas and communication infrastructure; and manufactures and supplies transmission and distribution lines construction equipment and tools. It serves manufacturing, commercial, industrial, transportation, institutional, and renewable and government customers, as well as utilities. MDU Resources Group, Inc. was incorporated in 1924 and is headquartered in Bismarck, North Dakota.