Value
6.1/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 7.3 |
| P/S | 9.2 |
| EV/EBITDA | 5.9 |
| Fwd P/E | 7.8 |
| PEG | 4.0 |
| Analyst target | 4.0 |
- ▸Forward P/E: 15.7x
- ▸PEG: 2.54
NWN · Why this verdict
Why Northwest Natural Holding Compa (NWN) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictSELL
Overall score4.9/10
ConfidenceHIGH
MacroNEUTRAL
TrendMatrix Research · core thesis
Engine thesis — one sentence
Northwest Natural Holding beat earnings estimates in 3 of the last 4 quarters with a strong average positive surprise, but 88% of revenue is concentrated in Oregon under a single regulatory jurisdiction, free cash flow is deeply negative at negative 232% of net income, and the dividend yield is flagged as potentially unsafe.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
With 88% of revenue concentrated in Oregon under the single regulatory authority OPUC, the company faces 4 high-level concentration risks in its regulatory filings, meaning a single adverse rate case or policy change in Oregon could materially impact the entire business. Bear case | The company diversifies revenue so that Oregon concentration falls below 80% within 24 months through expansion or acquisition in other jurisdictions. | →Stable |
| CounterGeographic concentration in a single regulated jurisdiction provides predictability and avoids the complexity of managing multiple regulatory relationships, which can actually reduce regulatory execution risk for a utility focused on customer service. | ||
Northwest Natural beat EPS estimates in 3 of the last 4 quarters, including a 107.8% positive surprise in the third quarter of 2025, with an average positive surprise of 29.7% across the four-quarter period, demonstrating consistent outperformance of lowered analyst expectations. Earnings | EPS surprise remains positive in at least 3 of the next 4 quarters, maintaining the beat pattern. | →Stable |
| CounterAn average surprise of 29.7% dominated by an extreme single quarter reading may overstate the typical beat pattern, and a gas utility beat record driven by weather-related demand could reverse quickly in a mild winter. | ||
Free cash flow is negative at negative 232% of net income, the most extreme earnings quality red flag in the dataset, indicating that the company is investing capital at a rate far exceeding its reported earnings and is dependent on external financing to maintain operations and dividends. Quality breakdown | Free cash flow improves to within negative 100% of net income within 4 quarters as the capital investment cycle passes its peak. | →Stable |
| CounterFor a regulated gas utility, capital-intensive infrastructure investment is rate-base accretive and earns a guaranteed regulatory return, so deeply negative free cash flow during a construction program is expected and not a sign of financial distress. | ||
The dividend is flagged as a high yield that appears unsafe given the current cash generation profile, and with free cash flow deeply negative, the dividend may be dependent on debt financing or asset sales rather than operating cash flows. Catalyst breakdown | The company maintains the current dividend for at least 4 consecutive quarters without a cut, demonstrating regulatory cash flows are sufficient to cover the payout. | →Stable |
| CounterRegulated utilities have a long track record of maintaining dividends through capital investment cycles because regulators allow cost recovery in future rate cases, making the dividend more secure than the current free cash flow figure implies. | ||
With 88% of revenue concentrated in Oregon under the single regulatory authority OPUC, the company faces 4 high-level concentration risks in its regulatory filings, meaning a single adverse rate case or policy change in Oregon could materially impact the entire business.
→StableBear case
- Expectation
- The company diversifies revenue so that Oregon concentration falls below 80% within 24 months through expansion or acquisition in other jurisdictions.
CounterGeographic concentration in a single regulated jurisdiction provides predictability and avoids the complexity of managing multiple regulatory relationships, which can actually reduce regulatory execution risk for a utility focused on customer service.
Northwest Natural beat EPS estimates in 3 of the last 4 quarters, including a 107.8% positive surprise in the third quarter of 2025, with an average positive surprise of 29.7% across the four-quarter period, demonstrating consistent outperformance of lowered analyst expectations.
→StableEarnings
- Expectation
- EPS surprise remains positive in at least 3 of the next 4 quarters, maintaining the beat pattern.
CounterAn average surprise of 29.7% dominated by an extreme single quarter reading may overstate the typical beat pattern, and a gas utility beat record driven by weather-related demand could reverse quickly in a mild winter.
Free cash flow is negative at negative 232% of net income, the most extreme earnings quality red flag in the dataset, indicating that the company is investing capital at a rate far exceeding its reported earnings and is dependent on external financing to maintain operations and dividends.
→StableQuality breakdown
- Expectation
- Free cash flow improves to within negative 100% of net income within 4 quarters as the capital investment cycle passes its peak.
CounterFor a regulated gas utility, capital-intensive infrastructure investment is rate-base accretive and earns a guaranteed regulatory return, so deeply negative free cash flow during a construction program is expected and not a sign of financial distress.
The dividend is flagged as a high yield that appears unsafe given the current cash generation profile, and with free cash flow deeply negative, the dividend may be dependent on debt financing or asset sales rather than operating cash flows.
→StableCatalyst breakdown
- Expectation
- The company maintains the current dividend for at least 4 consecutive quarters without a cut, demonstrating regulatory cash flows are sufficient to cover the payout.
CounterRegulated utilities have a long track record of maintaining dividends through capital investment cycles because regulators allow cost recovery in future rate cases, making the dividend more secure than the current free cash flow figure implies.
Per-dimension breakdown
Quality
4.2/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 2.7 |
| ROA | 1.9 |
| Gross margin | 4.9 |
| Op margin | 10.0 |
| Net margin | 4.8 |
| Current ratio | 3.2 |
| FCF quality | 0.0 |
| Moat | 3.9 |
| Piotroski F | 6.7 |
- ▸Earnings quality RED FLAG: -232% FCF/NI
- ▸No competitive moat
Growth
2.8/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 2.3 |
| EPS growth | 3.4 |
- ▸Declining revenue: -1%
Momentum
6.8/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 5.0 |
| MACD | 10.0 |
| OBV | 10.0 |
| MA position | 9.0 |
| Volume | 0.0 |
- ▸Volume accumulation (rising OBV)
- ▸Above 200-day MA
Sentiment
5.1/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 5.0 |
| Price target | 6.9 |
| erm sentiment | 3.2 |
Insider
5.0/10data confidence 50%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 5.1 |
- ▸Negligible insider buying — $79,847 (0.004% of mkt cap)
Peer rank
4.6/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 6.3 |
| quality rank | 2.9 |
| growth rank | 4.3 |
Technical
3.5/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 0.1 |
| support resistance | 2.1 |
| 52w position | 8.3 |
Risk (lower is worse)
6.1/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 7.7 |
| days to cover | 5.6 |
| volatility | 6.7 |
| put call | 3.3 |
| implied vol | 6.0 |
| beta | 10.0 |
| debt equity | 3.6 |
- ▸Concentration risks: 4 HIGH (10-K Item 1A — sized via position_sizing, validated via buy_confidence)
Catalyst
5.6/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 2.0 |
| earnings history | 6.7 |
| earnings timing | 5.0 |
| surprise avg | 10.0 |
| dividend safety | 4.2 |
- ▸Strong earnings: 3B/1M
- ▸Yield trap warning: high yield but unsafe
How the verdict was assembled
Engine trigger
Multiple concerning factors. Consider reducing position.
Engine technical detail
verdict_path:
L4:PATH_F_SELLPassed (7)
- MOMENTUM:6.8>=5.5
- INSIDER:OK
- 8K:CLEAN
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:40d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (1)
- ASYMMETRY:-0.2=NEGATIVE
Warning (0)
none
Reward-to-Risk
-0.22
Upside
-1.4%
Downside
6.2%
Sizing output
AVOID
SetupBREAKOUT — Golden cross, above all MAs, RSI 62, MACD bullish
EdgeNO_EDGE — No clear edge identified
SuitabilityAGGRESSIVE — MCap $2.1B<$5B
Investment implication
The F-path SELL output reflects an overall score of 3.9 below the 5.6 soft trigger — multiple weakening dimensions accumulated rather than a single hard-floor breach. The strongest dimension ( Momentum at 6.8) was not enough to lift the adjusted overall above the threshold. Co-occurring failed gates ( ASYMMETRY:-0.2=NEGATIVE) reinforce the read. Current asymmetry R:R is -0.22 — supplementary context, not the trigger for this path.
The strongest dimensions are Momentum at 6.8, Value at 6.1, and Risk (lower is worse) at 6.1; the weakest are Growth at 2.8, Technical at 3.5, and Quality at 4.2. The V9 engine flagged 1 failed gate, producing an asymmetric reward-to-risk of -0.22 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Northwest Natural beat EPS estimates in 3 of the last 4 quarters, including a 107.8% positive surprise in the third quarter of 2025, with an average positive surprise of 29.7% across the four-quarter period, demonstrating consistent outperformance of lowered analyst expectations.
Trip ifEPS surprise falls below negative 10% in at least 2 of the next 4 quarters.
- P2With 88% of revenue concentrated in Oregon under the single regulatory authority OPUC, the company faces 4 high-level concentration risks in its regulatory filings, meaning a single adverse rate case or policy change in Oregon could materially impact the entire business.
Trip ifOregon regulatory authority issues an adverse rate case decision that reduces allowed return on equity below 8%.
- P3Free cash flow is negative at negative 232% of net income, the most extreme earnings quality red flag in the dataset, indicating that the company is investing capital at a rate far exceeding its reported earnings and is dependent on external financing to maintain operations and dividends.
Trip ifFree cash flow declines to more than negative 300% of net income for 2 consecutive quarters.
- P4The dividend is flagged as a high yield that appears unsafe given the current cash generation profile, and with free cash flow deeply negative, the dividend may be dependent on debt financing or asset sales rather than operating cash flows.
Trip ifA dividend cut of more than 10% is announced or debt-to-equity rises above 2.0.