Reasons to Add National Fuel Gas (NFG) to Your Portfolio Now
National Fuel Gas Company’s NFG systematic investment will further strengthen its natural gas and oil operations, and help reduce greenhouse gas emissions. The company benefits from its strong presence in the Appalachian region, and expanding upstream and midstream operations. Given its growth opportunities, NFG makes for a solid investment option in the utility sector.
Let’s focus on the factors that make this Zacks Rank #2 (Buy) company a strong investment pick at the moment.
Growth Projections & Surprise History
The Zacks Consensus Estimate for fiscal 2023 earnings per share (EPS) has increased 2.2% to $5.22 in the past 60 days.
The consensus estimate for sales is pegged at $2.35 billion, indicating a year-over-year increase of 7.7%.
The company’s long-term (three- to five-year) earnings growth rate is 10.37%. It delivered an average earnings surprise of 4.4% in the last four quarters.
Return on Equity
Return on equity (ROE) indicates how efficiently a company has been utilizing the funds to generate returns. Currently, National Fuel Gas’ ROE is 19.71%, higher than the industry’s average of 10.66%. This indicates that the company has been utilizing the funds more constructively than its peers in the utility gas distribution industry.
Debt Position
Currently, NFG’s total debt to capital is 44.81%, much better than the industry’s average of 50.81%.
The time to interest earned ratio at the end of third-quarter fiscal 2023 was 6.2. The ratio, being greater than one, reflects the company’s ability to meet future interest obligations without difficulties.
Dividend History
National Fuel Gas continues to increase shareholders’ value through dividend payments. The company has been paying dividends for the past 121 years. In June 2023, its board of directors approved a 4.2% increase in dividend rate, marking the 53rd straight year of increase. The new quarterly dividend is 49.5 cents per share, resulting in an annualized dividend of $1.98. Its current dividend yield is 3.8%, better than the Zacks S&P 500 Composite’s 1.48%.
Systematic Investments
The company expects capital expenditure in the range of $905-$970 million for fiscal 2023. Total capital expenditure in the first nine months of fiscal 2023 was $727.7 million. NFG plans to invest $865-$975 million in fiscal 2024.
Since 2010, NFG has invested $2.4 billion in midstream operations to expand and modernize its pipeline infrastructure for gaining access to Appalachian production. It has more than $500 million in investment planned over the next five years for the modernization of pipeline transportation and distribution systems.
Price Performance
In the past three months, National Fuel Gas’ shares have risen 3.9% against the industry’s average 3.8% decline.
Image Source: Zacks Investment Research
Other Stocks to Consider
A few other top-ranked stocks from the same sector are TransAlta TAC, sporting a Zacks Rank #1 (Strong Buy), and MDU Resources Group Inc. MDU and OGE Energy Corp. OGE, both carrying a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for TAC’s 2023 EPS indicates a year-over-year increase of 1,912.5%. It delivered an average earnings surprise of 107.1% in the last four quarters.
MDU’s long-term earnings growth rate is 5.77%. The Zacks Consensus Estimate for 2023 EPS has improved 4.6% to $1.36 in the past 60 days.
OGE’s long-term earnings growth rate is 3.65%. It delivered an average earnings surprise of 3.8% in the last four quarters.
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OGE Energy Corporation (OGE) : Free Stock Analysis Report
TransAlta Corporation (TAC) : Free Stock Analysis Report
MDU Resources Group, Inc. (MDU) : Free Stock Analysis Report
National Fuel Gas Company (NFG) : Free Stock Analysis Report
