3 Reasons Why Growth Investors Shouldn't Overlook Northwest Natural (NWN)

Northwest Natural (NWN) is highlighted as a compelling growth stock by the Zacks Growth Style Score system, earning a Growth Score of B and a Zacks Rank #2 (Buy). The natural gas distributor is projected to achieve 23.4% EPS growth this year, significantly outpacing the industry average of 9.3%, and boasts a 4.9% year-over-year cash flow growth, outperforming the industry's -0.1%. Furthermore, current-year earnings estimates have seen positive revisions, surging 1.4% over the past month, collectively positioning NWN for potential outperformance in the growth equity space.

Analysis

Northwest Natural (NWN) presents a compelling growth case based on several forward-looking fundamental indicators. The company is projected to deliver earnings per share (EPS) growth of 23.4% for the current year, a figure that significantly outpaces the natural gas distribution industry's average forecast of 9.3%. This projected acceleration is particularly noteworthy when contrasted with the company's modest historical EPS growth rate of 1.1%. Supporting this outlook is robust cash flow generation; NWN's year-over-year cash flow has grown by 4.9%, standing in sharp contrast to an industry average that contracted by 0.1%. Furthermore, this is complemented by a consistent 3-5 year annualized cash flow growth rate of 7.2%, slightly above the industry's 7%. Analyst sentiment reinforces this positive thesis, with the Zacks Consensus Estimate for current-year earnings having been revised upward by 1.4% in the last month, a strong indicator of potential near-term price momentum. This combination of factors has earned the stock a Zacks Rank #2 (Buy) and a Growth Score of B, identifying it as a potentially strong performer.

Key Decisions for Investors

• Growth-focused investors should consider NWN due to its combination of a Zacks #2 (Buy) rating and a forward EPS growth projection of 23.4%, which signals significant outperformance relative to its industry.
• Investors should closely monitor upcoming quarterly results to validate the projected earnings acceleration, as the investment thesis hinges on this substantial growth rather than on historical performance.
• Despite positive indicators, it is crucial to assess the company's ability to finance its expansion internally, as the 4.9% year-over-year cash flow growth is a key factor highlighted for funding future growth without relying on expensive external capital.