NorthWestern CorporationNWE

Morningstar Rating

Stock Research and Analysis

by Mark Barnett

Regulatory wins have helped NorthWestern become a fully regulated and integrated electric utility. NorthWestern is pursuing growth through transmission projects, hoping to connect demand centers in the West with an anticipated build-out of wind generation Read more

Bulls Say

NorthWestern's aggressive growth plans would satisfy the need for new transmission infrastructure in its territory, with higher returns than other utility investments.

This company is now a pure-play utility, lowering the uncertainty of its earnings and cash flows and providing a more reliable income investment.

Reregulating Colstrip 4 should provide a more consistent stream of income and pave the way for NorthWestern to become a fully integrated utility in Montana.

At our fair value estimate, NorthWestern would yield an attractive 6%. Read more

Bears Say

NorthWestern's 2003 bankruptcy and subsequent violations of ring-fencing agreements may have permanently damaged its reputation with regulators.

The emergence of larger players supporting their own transmission projects likely means that NorthWestern will have to play a smaller part in transmission development.

The threat of high interest rates is a negative for regulated utilities, which many investors consider comparable to fixed-income investments.

Financing constraints and delays in proposed wind farms could put the brakes on management's plans for infrastructure investment and earnings growth. Read more

Strategy

With its balance sheet in much better health, NorthWestern is now focusing on a number of transmission projects to expand its rate base, which would earn FERC-granted returns. The company is also pursuing Read more

Management

NorthWestern's management still has a lot to prove. CEO Bob Rowe brings plenty of experience with regulation: He previously served as a public service commissioner in Montana. His recent consulting work kept him involved with regulated industries. He Read more

Profile

NorthWestern provides electricity and natural gas to 656,000 customers in the U.S. Upper Midwest and Northwest. Its regulated electric utility business consists of integrated Read more

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