On Monday, Ladenburg Thalmann adjusted the price target for Northwestern Corp. (NASDAQ:NWE) to $55.50, an increase from the previous target of $53.50. The firm kept its Neutral rating on the stock. The revision followed an earnings call where the third-quarter earnings per share (EPS) were discussed, revealing a forecast of $0.63, which falls $0.09 short of the consensus estimate of $0.72.
The analyst at Ladenburg Thalmann recalculated the 2024 EPS estimates for Northwestern Corp. after the call, citing several year-over-year (YOY) benefits and expenses that influenced the quarter's results. The company is expected to see positive rate impacts from new rates in Montana and South Dakota, as well as increased transmission margins.
These benefits, however, are anticipated to be partially offset by higher operation and maintenance (O&M), depreciation and amortization (D&A), and interest expenses.
Despite these factors, Northwestern Corp. has not received interim rates in Montana, leading to a reduction in the expected benefit for 2024. Consequently, the analyst has decreased the 2024 EPS estimate by $0.05 to $3.48, which is slightly below the consensus of $3.51. The interim rates are now anticipated to mostly affect the company's financials in 2025.
Additionally, the Yellowstone power plant, which continues to supply energy to the grid, is undergoing final tests. The company expects to fully commission the plant in the coming weeks. Despite the lowered EPS estimate for 2024, Ladenburg Thalmann has decided to maintain its EPS estimates for the years 2025 through 2027.
In other recent news, Northwestern Energy reported steady growth in its earnings call for the quarter ended June 30, 2024, with a diluted EPS of $0.52 and a non-GAAP diluted EPS of $0.53. The company also confirmed its 2024 diluted EPS guidance of $3.42 to $3.62. Significant strides were made in business operations, including strategic acquisitions such as Energy West Montana and substantial interest in Colstrip Units 3 and 4.
BofA Securities initiated coverage on Northwestern Corp with a Buy rating, highlighting potential growth opportunities. The firm's projected earnings per share for the fiscal years 2024, 2025, and 2026 were $3.62, $3.71, and $3.91 respectively, compared to consensus estimates of $3.50, $3.68, and $3.87 for the same periods.
Northwestern Energy also announced the upcoming resignation of board member Anthony Clark, who will join the National Association of Regulatory Utility Commissioners as Executive Director-Elect.
The company declared a dividend of $0.65 per share and committed to a 5% dividend yield and 4% to 6% EPS growth. Northwestern Energy has invested over $1 billion in Montana's infrastructure with plans to invest an additional $1 billion by the end of 2024.
InvestingPro Insights
To complement the analysis provided by Ladenburg Thalmann, InvestingPro data offers additional insights into Northwestern Corp.'s (NASDAQ:NWE) financial position and market performance. The company's market capitalization stands at $3.42 billion, with a P/E ratio of 16.25, suggesting a moderate valuation relative to earnings.
InvestingPro Tips highlight that Northwestern Corp. has maintained dividend payments for 20 consecutive years and has raised its dividend for 19 consecutive years. This consistent dividend history may be attractive to income-focused investors, especially considering the current dividend yield of 4.66%. The company's commitment to dividends aligns with its stable utility business model, which often prioritizes steady shareholder returns.
Another relevant InvestingPro Tip notes that the stock is trading near its 52-week high, with a strong return of 15.19% over the last three months. This recent performance could reflect investor confidence in the company's ability to navigate the challenges mentioned in the earnings call, such as the delayed interim rates in Montana and increased expenses.
For investors seeking a more comprehensive analysis, InvestingPro offers 8 additional tips that could provide further context to Northwestern Corp.'s financial health and market position.
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