Analyzing Spark Energy (SPKE) & NorthWestern (NWE)

Spark Energy (NASDAQ: SPKE) and NorthWestern (NYSE:NWE) are both utilities companies, but which is the superior business? We will compare the two businesses based on the strength of their risk, valuation, profitability, analyst recommendations, earnings, institutional ownership and dividends.

Earnings and Valuation

This table compares Spark Energy and NorthWestern’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Spark Energy $798.05 million 0.44 $18.85 million ($0.48) -20.94
NorthWestern $1.31 billion 2.12 $162.70 million $3.30 16.93

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

Dividends

Spark Energy pays an annual dividend of $0.73 per share and has a dividend yield of 7.3%. NorthWestern pays an annual dividend of $2.20 per share and has a dividend yield of 3.9%. Spark Energy pays out -152.1% of its earnings in the form of a dividend. NorthWestern pays out 66.7% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. NorthWestern has increased its dividend for 9 consecutive years. Spark Energy is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Ratings

This is a summary of recent ratings and recommmendations for Spark Energy and NorthWestern, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Spark Energy 0 1 3 0 2.75
NorthWestern 3 1 1 0 1.60

Spark Energy currently has a consensus price target of $19.75, suggesting a potential upside of 96.52%. NorthWestern has a consensus price target of $54.75, suggesting a potential downside of 2.02%. Given Spark Energy’s stronger consensus rating and higher probable upside, research analysts clearly believe Spark Energy is more favorable than NorthWestern.

Risk & Volatility

Spark Energy has a beta of -1.93, suggesting that its share price is 293% less volatile than the S&P 500. Comparatively, NorthWestern has a beta of 0.22, suggesting that its share price is 78% less volatile than the S&P 500.

Institutional & Insider Ownership

31.7% of Spark Energy shares are held by institutional investors. Comparatively, 93.6% of NorthWestern shares are held by institutional investors. 67.6% of Spark Energy shares are held by company insiders. Comparatively, 1.4% of NorthWestern shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Profitability

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

Net Margins Return on Equity Return on Assets
Spark Energy 0.48% 3.35% 0.95%
NorthWestern 12.86% 9.38% 3.01%

Summary

NorthWestern beats Spark Energy on 11 of the 17 factors compared between the two stocks.

About Spark Energy

Spark Energy, Inc., through its subsidiaries, operates as an independent retail energy services company in the United States. It operates through two segments, Retail Electricity and Retail Natural Gas. The company is involved in the retail distribution of electricity and natural gas to residential, commercial, and industrial customers. As of December 31, 2017, it operated in 94 utility service territories across 19 states and the District of Columbia, and had approximately 1,042,000 residential customer equivalents. The company was founded in 1999 and is headquartered in Houston, Texas. Spark Energy, Inc. is a subsidiary of Retailco, LLC.

About NorthWestern

NorthWestern Corporation, doing business as NorthWestern Energy, provides electricity and natural gas to residential, commercial, and industrial customers. The company operates through Electric Operations and Natural Gas Operations segments. It generates, transmits, and distributes electricity; and produces, stores, transmits, and distributes natural gas, as well as owns municipal franchises to provide natural gas service in the communities. The company's electric transmission and distribution network consists of approximately 24,660 miles of overhead and underground transmission and distribution lines, as well as 385 transmission and distribution substations in Montana; and transmission and distribution network comprises of approximately 3,560 miles of overhead and underground transmission and distribution lines, as well as 126 substations in South Dakota. Its natural gas transmission system consists of approximately 2,100 miles of pipeline. The company serves approximately 718,300 customers in Montana, South Dakota, and Nebraska, the United States. NorthWestern Corporation was founded in 1923 and is based in Sioux Falls, South Dakota.

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