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Northwest Natural Gas Hits 52-Week High on Falls Water Buyout

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Northwest Natural Gas Hits 52-Week High on Falls Water Buyout

Northwest Natural Gas (NWN) scales a 52-week high on the back of culminating its Falls Water Company's consolidation process.

Northwest Natural Gas Company NWN reached a new 52-week high of $70.05 before closing the session a bit lower at $69.95 on Sep 17. Year to date, the stock has delivered an impressive return of about 17.3% compared with the Zacks S&P 500 Composite’s rally of 8.1%.

Over the past 52 weeks, the Northwest Natural Gas Company’s stock has ranged from a low of $51.50 to a high of $70.05. Average volume of shares traded over the past three months is approximately 0.11 million.

What is Driving Northwest Natural Gas Higher?

Northwest Natural Gas Company, continues to gain from closing its acquisition process of Falls Water Company. The company’s subsidiary entered into an agreement and filed a petition with the Idaho Public Utilities Commission (IPUC) last December to acquire Falls Water, based in Idaho Falls, ID. It currently serves approximately 5,500 customers.

The company has set its footprint in the regulated water utility sector with this buyout. Also, it has three pending transactions, one in Oregon and two in Washington, all expected to be completed by this year-end. Currently, the company has base of 740,000 natural gas customers and hopes to add nearly 7,600 water utility customers by 2018-end via consolidations across Northwest region.

Over the past five-year period (2013-2017), the company has incurred nearly $676 million as capital expenditure for constructions and extensions of mains, recurring replacement of old mains as well as for innovation and technology. The company is set to incur a capex of nearly $800 million over the period of 2018-2022 to further expand its services via more acquisition and extension of mains.

The company is poised to benefit from the growing need for water utilities and its users in the region. Also, the business diversification will drive a better financial performance for the company and its shareholders. The stock has seen the Zacks Consensus Estimate for 2018 and 2019 earnings move 0.9% and 0.4% north to $2.23 and $2.44, respectively, over the past 30 days.

Zacks Rank & Stocks to Consider

Northwest Natural Gas Company carries a Zacks Rank #3 (Hold). Better-ranked stocks from the same sector include NewJersey Resources Corporation NJR, ONE Gas, Inc. OGS and Southwest Gas Corporation SWX, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

NewJersey Resources surpassed estimates in two of the trailing four quarters with an average beat of 72.16%. The stock has seen the Zacks Consensus Estimate for current-year earnings being revised 1.2% upward over the past 60 days to $2.62 per share.

ONE Gas outpaced estimates in three of the trailing four quarters with an average earnings surprise of 15.83%. The stock has seen the consensus estimate for 2018 bottom line move 3.5% north over the past 60 days to $3.25 per share.

Southwest Gas exceeded estimates in three of the last four quarters with an average positive surprise of 24.17%. The stock has seen the consensus mark for current-year earnings being raised 3.6% over the past 60 days to $3.71 per share.

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