The companies in the Zacks Utility - Gas Distribution industry offer services to transport natural gas from the region of production to end-users throughout the United States. These utilities operate through extensive underground pipeline networks that deliver gas to millions of residential, commercial and industrial consumers. The regulated structure enables the companies to recover expenses through approved rate hikes, while returning value to shareholders through dividends and share repurchases.
The demand for natural gas is rising in the United States due to its clean-burning nature, which helps reduce emissions. Utilities utilize the widespread transmission and distribution lines and interstate pipelines to meet the demand from all customer groups.
Amid the rising importance of gas distribution, let us discuss ONE Gas, Inc. OGS and Northwest Natural Holding Company NWN, two regulated utilities gaining from the rise in natural gas demand and major infrastructure development investments, making them comparable in the utility space.
ONE Gas, with its fully regulated natural gas distribution framework, efficiently serves millions of customers across the United States and supports rising natural demand. OGS operates 45,400 miles of natural gas distribution and transmission pipelines and has 60.8 billion cubic feet (Bcf) of storage capacity. Its systematic capital investments in infrastructure development help maintain service reliability, while enhancing operational efficiency and supporting long-term financial growth.
Northwest Natural is recognized as a regulated natural gas utility along with its subsidiaries that serve millions of customers in the United States. NWN engages in natural gas transmission and distribution service, operates the Mist gas storage facility and provides water and wastewater services. The company manages 14,500 miles of distribution mains, which include nearly 700 miles of transmission mains and 10,400 miles of service lines. It has 21.6 Bcf of natural gas storage capacity. The company undertakes strategic capital investment to strengthen infrastructure, ensure safe and reliable delivery across its expanding customer base and support long-term growth.
ONE Gas and Northwest Natural are among the leading utilities. Examining their fundamentals side by side can reveal which stock presents the most attractive investment opportunity.
OGS & NWN’s Earnings Growth Projections
The Zacks Consensus Estimate for OGS’ earnings per share is pegged at $4.72 in 2026 and $5.01 in 2027, suggesting year-over-year growth of 5.36% and 6.09%, respectively.
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The Zacks Consensus Estimate for NWN’s earnings per share is pegged at $3.05 in 2026 and $3.22 in 2027, suggesting year-over-year growth of 4.10% and 5.74%, respectively.
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Debt to Capital
The Zacks Utilities sector is a capital-intensive one and regular investment is required for infrastructure upgradation and maintenance to manage the operations efficiently, enhance reliability and support growing demand. These utilities combine internally generated cash flows with borrowed funds from capital markets to finance long-term investments, ensuring steady growth and reliable service delivery.
ONE Gas’ debt-to-capital currently stands at 40.65% compared with Northwest Natural’s 62.29%. Both companies are using debt to fund their business. NWN's debt level surpasses both OGS and the industry average of 54.47%, highlighting its greater reliance on debt financing.
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OGS & NWN’s Dividend Yield
Dividends are regular payments distributed by a utility company to reward its shareholders and provide a direct return on their investment. It reflects the company’s financial stability and indicates strong cash flow and consistent earnings.
Currently, the dividend yield for Northwest Natural is 4.06%, while that for ONE Gas is 3.5%. The dividend yields of both companies are higher than the S&P 500’s yield of 1.42%
Capital Investment Plans
Utilities operation is capital-intensive, requiring substantial investments for infrastructure development, enhancing system reliability and maintaining the existing assets. Natural gas distribution utility requires continuous investment to maintain and upgrade pipelines, storage facilities and delivery infrastructure, ensuring safety and reliable customer service.
ONE Gas plans to invest $800 million in 2026, totaling about $4.3 billion over five years, supporting the company’s Vintage Pipeline Replacement Program and rate base growth. Northwest Natural aims to invest $500-550 million in 2026 and forecasts investment of $2.6-$2.9 billion in 2026–2030, supporting rate base growth.
Price Performance
Northwest Natural’s shares have risen 17.3% in the past year compared with ONE Gas’ 2.7% growth in the same time period.
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Summing Up
ONE Gas and Northwest Natural both benefit from expanding customer base, rising natural gas demand, and are investing strategically in infrastructure development to provide safe and reliable service to millions of customers across the United States.
ONE Gas’ stronger earnings estimate revisions, wider capital expenditure plan and lower debt-to-capital ratio make it a more attractive choice in the utility sector.
Based on the above discussion, ONE Gas currently has an edge over Northwest Natural, though both presently carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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Northwest Natural Gas Company (NWN): Free Stock Analysis Report
ONE Gas, Inc. (OGS): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).