Back to top

Image: Bigstock

3 Top-Ranked Utility Stocks Shaking off Market Woes

Read MoreHide Full Article

The Zacks Utilities sector has been notably defensive in 2022, down nearly 7% vs. the S&P 500’s decline of roughly 20%. It goes without saying that the sector has been a bright spot in an otherwise dim market.

Consumers have a never-ending need for the services provided by these companies, which explains why they've fared better than most.

Further, the sector is highly ranked (number two out of a total of 16 Zacks sectors), indicating favorable earnings estimate revisions have been coming in.

For the cherry on top, stocks in the sector generally pay rock-solid dividends, undoubtedly a major positive that all investors love.

For those looking to tap into the realm, three highly ranked stocks – Otter Tail Corp. (OTTR - Free Report) , National Fuel Gas Company (NFG - Free Report) , and Consolidated Water Co. (CWCO - Free Report) – all deserve consideration.

Below is a year-to-date chart of all three stocks.

Zacks Investment Research
Image Source: Zacks Investment Research

Let’s take a deeper dive into each one.

Otter Tail Corp.

Otter Tail’s primary business is the production, transmission, distribution, and sale of electric energy.

Analysts have upped their earnings outlook across the board over the last 60 days, pushing OTTR into a Zacks Rank #1 (Strong Buy).

Zacks Investment Research
Image Source: Zacks Investment Research

As mentioned, utility stocks reward their shareholders, and OTTR is no different – the company’s 2.6% annual dividend yield is lower than its Zacks sector average, but the company has upped its dividend payout five times over the last five years with a 5.3% five-year annualized dividend growth rate.

Zacks Investment Research
Image Source: Zacks Investment Research

In addition, Otter Tail has a mighty strong earnings track record, exceeding revenue and earnings estimates in eight consecutive quarters. Just in its latest print, the utility provider penciled in a 20% top-line beat paired with a steep 61% EPS beat.

Below is a chart illustrating the company’s revenue on a quarterly basis.

Zacks Investment Research
Image Source: Zacks Investment Research

Consolidated Water Co.

Consolidated Water is involved in developing and operating sea-water desalination plants and water distribution systems in water-scarce areas.

CWCO’s earnings outlook has turned visibly bright over the last several months.

Zacks Investment Research
Image Source: Zacks Investment Research

Like OTTR, Consolidated Water’s earnings track record is impressive; the company has exceeded the Zacks Consensus EPS Estimate by double-digit percentages in each of its last five prints. Just in its latest release, the company penciled in a 12.5% bottom-line beat.

Revenue has consistently been reported above expectations as well, with CWCO registering four top-line beats over its last five quarters.

Zacks Investment Research
Image Source: Zacks Investment Research

Further, CWCO’s growth profile is stellar; earnings are forecasted to soar a triple-digit 220% in FY22 and a further double-digit 26% in FY23.

Top-line growth is also commendable, with revenue estimates calling for 36% and 26% growth in FY22 and FY23, respectively.

Zacks Investment Research
Image Source: Zacks Investment Research

National Fuel Gas Company

National Fuel Gas Company is an integrated energy company with natural gas assets located in the prolific Appalachian basin and oil-producing assets in California.

Analysts have been bullish on their earnings outlook across nearly all timeframes over the last 60 days.

Zacks Investment Research
Image Source: Zacks Investment Research

In addition, NFG shares appear reasonably priced; the company’s 10.6X forward earnings multiple is well beneath its 14.2X five-year median and reflects a sizable 25% discount relative to its Zacks Sector.

NFG sports a Style Score of a B for Value.

Zacks Investment Research
Image Source: Zacks Investment Research

NFG’s growth projections are a significant highlight; earnings are forecasted to climb 40% in FY22 and a further 22% in FY23.

The projected earnings increase comes on top of forecasted Y/Y revenue growth of 30% and 12% in FY22 and FY23, respectively.

Zacks Investment Research
Image Source: Zacks Investment Research

Bottom Line

While the broader market has struggled in 2022, the Zacks Utilities sector has put its defensive nature on full display, shaking off market woes.

The sector’s demand never fades, as consumers obviously need the amenities they provide.

All three stocks above – Otter Tail Corp. (OTTR - Free Report) , National Fuel Gas Company (NFG - Free Report) , and Consolidated Water Co. (CWCO - Free Report) – reside in the sector paired with a favorable Zacks Rank, telling us that their near-term earnings outlook is bright.


In-Depth Zacks Research for the Tickers Above


Normally $25 each - click below to receive one report FREE:


National Fuel Gas Company (NFG) - free report >>

Otter Tail Corporation (OTTR) - free report >>

Consolidated Water Co. Ltd. (CWCO) - free report >>

Published in