Critical Analysis: NorthWestern Energy Group (NYSE:NWE) vs. Public Service Enterprise Group (NYSE:PEG)

NorthWestern Energy Group (NYSE:NWE) and Public Service Enterprise Group (NYSE:PEG) are both utilities companies, but which is the superior investment? We will compare the two businesses based on the strength of their profitability, risk, institutional ownership, earnings, dividends, analyst recommendations and valuation.

Earnings and Valuation

This table compares NorthWestern Energy Group and Public Service Enterprise Group’s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
NorthWestern Energy Group	$1.48 billion	2.11	$183.01 million	$3.01	16.90
Public Service Enterprise Group	$9.80 billion	3.25	$1.03 billion	$5.61	11.41

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

Institutional and Insider Ownership

96.1% of NorthWestern Energy Group shares are held by institutional investors. Comparatively, 72.3% of Public Service Enterprise Group shares are held by institutional investors. 0.9% of NorthWestern Energy Group shares are held by insiders. Comparatively, 0.6% of Public Service Enterprise Group shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Analyst Ratings

This is a summary of current recommendations and price targets for NorthWestern Energy Group and Public Service Enterprise Group, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
NorthWestern Energy Group	2	3	3	0	2.13
Public Service Enterprise Group	0	4	6	0	2.60

NorthWestern Energy Group currently has a consensus target price of $52.50, suggesting a potential upside of 3.22%. Public Service Enterprise Group has a consensus target price of $64.05, suggesting a potential upside of 0.06%. Given NorthWestern Energy Group’s higher possible upside, research analysts clearly believe NorthWestern Energy Group is more favorable than Public Service Enterprise Group.

Dividends

NorthWestern Energy Group pays an annual dividend of $2.56 per share and has a dividend yield of 5.0%. Public Service Enterprise Group pays an annual dividend of $2.28 per share and has a dividend yield of 3.6%. NorthWestern Energy Group pays out 85.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Public Service Enterprise Group pays out 40.6% of its earnings in the form of a dividend. NorthWestern Energy Group has increased its dividend for 19 consecutive years and Public Service Enterprise Group has increased its dividend for 12 consecutive years. NorthWestern Energy Group is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Volatility and Risk

NorthWestern Energy Group has a beta of 0.46, meaning that its share price is 54% less volatile than the S&P 500. Comparatively, Public Service Enterprise Group has a beta of 0.6, meaning that its share price is 40% less volatile than the S&P 500.

Profitability

This table compares NorthWestern Energy Group and Public Service Enterprise Group’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
NorthWestern Energy Group	11.91%	6.62%	2.43%
Public Service Enterprise Group	23.83%	12.20%	3.63%

Summary

Public Service Enterprise Group beats NorthWestern Energy Group on 11 of the 17 factors compared between the two stocks.

About NorthWestern Energy Group

NorthWestern Energy Group, Inc. provides electricity and natural gas to residential, commercial, and various industrial customers. 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 provides electricity and/or natural gas to approximately 764,200 customers in Montana, South Dakota, Nebraska, and Yellowstone National Park. NorthWestern Energy Group, Inc. was founded in 1923 and is based in Sioux Falls, South Dakota.

About Public Service Enterprise Group

Public Service Enterprise Group Incorporated, through its subsidiaries, operates as an energy company primarily in Mid-Atlantic United States. The company operates through PSE&G and PSEG Power. The PSE&G segment transmits electricity; distributes electricity and gas to residential, commercial, and industrial customers, as well as invests in solar generation projects, and energy efficiency and related programs; and offers appliance services and repairs. As of December 31, 2022, it had electric transmission and distribution system of 25,000 circuit miles and 864,000 poles; 55 switching stations with an installed capacity of 39,653 megavolt-amperes (MVA), and 235 substations with an installed capacity of 9,735 MVA; four electric distribution headquarters and five electric sub-headquarters; and 18,000 miles of gas mains, 12 gas distribution headquarters, two sub-headquarters, and one meter shop, as well as 56 natural gas metering and regulating stations. Public Service Enterprise Group Incorporated was incorporated in 1985 and is based in Newark, New Jersey.