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Reasons to Add National Fuel Gas (NFG) to Your Portfolio Now

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National Fuel Gas Co.’s (NFG - Free Report) consistent capital investments to strengthen natural gas and oil operations, efficient cost management and the acquisition of Shell’s upstream and midstream assets to expand operations in the Appalachian region are expected to drive the company’s performance over the long run.

Let’s focus on the factors that make this Zacks Rank #2 (Buy) stock a strong investment pick at the moment. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Growth Projection & Surprise History

The Zacks Consensus Estimate for National Fuel Gas’ fiscal 2022 earnings has moved up by 7.6% in the past 60 days to $5.65 per share. The Zacks Consensus Estimate for NFG’s fiscal 2023 earnings has moved up by 11.6% in the past 60 days to $6.45 per share.

National Fuel Gas’ long-term (three to five years) earnings growth is projected at 10.1%.

National Fuel Gas delivered an average earnings surprise of 12.4% in the last four quarters.

Stable Investments & Emissions Reduction

National Fuel Gas has long-term capital plans to boost the earnings of each of its business segments. The company plans to invest in the range of $665-$810 million in fiscal 2022. NFG invested $770 million in fiscal 2021 and has invested $2.2 billion since 2010 in midstream operations to expand and modernize its pipeline infrastructure for gaining access to Appalachian production.

National Fuel Gas is also investing to lower greenhouse gas emissions from delivery systems and aims to lower emissions by 75% by 2030 and 90% by 2050 from the 1990 levels.

Inorganic Growth

National Fuel Gas’ acquisition of Royal Dutch Shell’s Upstream and Midstream Assets in Pennsylvania for $500 million is accretive to earnings and production. The Exploration and Production (E&P) segment’s net production was 85.1 billion cubic feet equivalent (Bcfe) in the first quarter of fiscal 2022, reflecting an increase of 5.6 Bcfe or 7% from the prior-year quarter.

Net E&P production was 327.4 Bcfe for fiscal 2021 and is expected in the range of 340-365 Bcfe in fiscal 2022 due to the existing long-term contracts and full-year contributions from the acquired Shell assets.

Return on Equity

Return on Equity (ROE) indicates how efficiently a company is utilizing shareholders’ funds in the business to generate returns. At present, National Fuel Gas’ ROE is 21.6%, higher than the industry average of 10.1%. This indicates that the company is utilizing the funds more effectively than industry peers.

Price Performance

In the past six months, NFG stock has rallied 23.3% compared with the industry’s 21.5% growth.

Zacks Investment Research
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Other Stocks to Consider

Some other similar-ranked stocks from the sector include NewJersey Resources (NJR - Free Report) , South Jersey Industries (SJI - Free Report) and Ameren (AEE - Free Report) .

Currently, NewJersey Resources, South Jersey Industries and Ameren have a dividend yield of 3.2%, 3.6% and 2.4%, respectively, compared with the Zacks S&P 500 composite's average of 1.5%.

The Zacks Consensus Estimate for 2022 earnings per share of NewJersey Resources, South Jersey Industries and Ameren has moved up 5.56%, 4.32% and 5.47%, respectively, year over year.

In the past three months, NJR, SJI and AEE shares have surged 18.4%, 34.8% and 8.6%, respectively.