Financial Review: SCANA (NYSE:SCG) & NorthWestern (NWE)

SCANA (NYSE: SCG) and NorthWestern (NYSE:NWE) are both mid-cap utilities companies, but which is the superior stock? We will compare the two companies based on the strength of their earnings, risk, profitability, valuation, analyst recommendations, dividends and institutional ownership.

Valuation & Earnings

This table compares SCANA and NorthWestern’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
SCANA $4.23 billion 1.31 $595.00 million $3.16 12.30
NorthWestern $1.26 billion 2.25 $164.17 million $3.31 17.61

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

Dividends

SCANA pays an annual dividend of $2.45 per share and has a dividend yield of 6.3%. NorthWestern pays an annual dividend of $2.10 per share and has a dividend yield of 3.6%. SCANA 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. NorthWestern pays out 63.4% of its earnings in the form of a dividend. SCANA has raised its dividend for 17 consecutive years and NorthWestern has raised its dividend for 8 consecutive years. SCANA is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

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

Net Margins Return on Equity Return on Assets
SCANA 10.45% 10.05% 3.05%
NorthWestern 12.44% 9.41% 2.89%

Risk & Volatility

SCANA has a beta of 0.2, suggesting that its share price is 80% less volatile than the S&P 500. Comparatively, NorthWestern has a beta of 0.38, suggesting that its share price is 62% less volatile than the S&P 500.

Analyst Ratings

This is a summary of current recommendations for SCANA and NorthWestern, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
SCANA 2 6 2 0 2.00
NorthWestern 3 1 0 0 1.25

SCANA presently has a consensus target price of $59.21, suggesting a potential upside of 52.34%. NorthWestern has a consensus target price of $54.67, suggesting a potential downside of 6.23%. Given SCANA’s stronger consensus rating and higher possible upside, analysts plainly believe SCANA is more favorable than NorthWestern.

Insider and Institutional Ownership

66.7% of SCANA shares are held by institutional investors. Comparatively, 93.6% of NorthWestern shares are held by institutional investors. 0.4% of SCANA shares are held by company insiders. Comparatively, 1.3% of NorthWestern shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Summary

SCANA beats NorthWestern on 9 of the 17 factors compared between the two stocks.

SCANA Company Profile

SCANA Corporation is a holding company. The Company, through its subsidiaries, is engaged in the generation, transmission, distribution and sale of electricity in South Carolina. The Company operates through segments, including Electric Operations, Gas Distribution, Gas Marketing and All Other. The Company is engaged in the purchase, transmission and sale of natural gas in North Carolina and South Carolina. The Electric Operations segment generates, transmits and distributes electricity. The Company’s regulated businesses include subsidiaries, such as South Carolina Electric & Gas Company (SCE&G), South Carolina Fuel Company, Inc. (Fuel Company), South Carolina Generating Company, Inc. (GENCO) and Public Service Company of North Carolina, Incorporated (PSNC Energy). The Company’s nonregulated businesses include subsidiaries, such as SCANA Energy Marketing, Inc. (SCANA Energy), ServiceCare, Inc., SCANA Services, Inc. and SCANA Corporate Security Services, Inc.

NorthWestern Company Profile

NorthWestern Corporation, doing business as North-Western Energy, provides electricity and natural gas. The Company’s segments are Electric operations, Natural gas operations and All other. As of December 31, 2016, the Company provided electricity and natural gas to approximately 709,600 customers in Montana, South Dakota and Nebraska. It generates and distributes electricity in South Dakota; distributes natural gas in South Dakota and Nebraska, and generates and distributes electricity and distributes natural gas in Montana. Its regulated electric utility business in Montana includes generation, transmission and distribution. As of December 31, 2016, it provided retail electricity in 110 communities in South Dakota. Its regulated natural gas utility business in Montana includes production, storage, transmission and distribution. As of December 31, 2016, it provided natural gas to approximately 88,500 customers in 60 South Dakota communities and four Nebraska communities.

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