Northwest Natural Holding (NWN) Could Be 14% Undervalued On Its Texas Growth Story

Northwest Natural Holding (NWN) is back in focus after recent trading left the stock near US$49.39. Investors are weighing this regulated utility’s mixed short term returns against its longer, multi year track record.

Over the past year, Northwest Natural Holding has delivered a 23.77% total shareholder return, with a 5.67% year to date share price return that contrasts with softer three month share price performance. This suggests momentum has cooled slightly after a stronger run and may reflect shifting views on future risk and growth potential at around US$49.39.

Compare Northwest Natural Holding’s recent 23.77% total return with a hand picked group of income focused utilities and infrastructure stocks screened as 11 dividend fortresses.

With Northwest Natural Holding steady near US$49.39 after a cooler few months, some investors are eyeing a pullback while others see a regulated utility with income appeal today. How does the current price stack up against its fundamentals?

Most Popular Narrative: 14.1% Undervalued

At $49.39, the most followed narrative on Northwest Natural Holding pegs fair value at $57.50, so the current price sits below that central estimate.

Robust customer growth in Texas via the SiEnergy and Pines acquisitions, supported by urbanization and population expansion, suggests a long tailwind for meter additions, which may translate to steady increases in revenues and future earnings.

Read the complete narrative.

Want to see what is sitting behind that growth story? The narrative focuses on steady meter additions, firmer margins and a richer earnings multiple. The exact mix of those moving parts is where it gets interesting.

Result: Fair Value of $57.50 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, there are still meaningful risks for Northwest Natural Holding, including potential regulatory pushback on gas infrastructure and any slowdown in Texas housing that weakens meter growth expectations.

Find out about the key risks to this Northwest Natural Holding narrative.

Another View: SWS DCF Model Points to Overvaluation

While the most popular narrative argues that Northwest Natural Holding is around 14.1% undervalued at $49.39, the Simply Wall St DCF model points in the opposite direction. On that cash flow view, the current price sits above an estimated fair value of $39.46, which frames today’s level as overvalued. Which set of assumptions do you find more convincing?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Northwest Natural Holding for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 52 high quality undervalued stocks. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Next Steps

With a mix of risks and rewards emerging from this Northwest Natural Holding review, take a moment to move quickly and test the numbers for yourself using the 3 key rewards and 2 important warning signs.

Looking for more investment ideas beyond Northwest Natural Holding?

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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