Northwest Natural Gas Earnings Preview

Investors are braced for a bumpy ride ahead of Northwest Natural Gas' (NYSE: NWN  ) earnings announcement as the company has wavered between beating and falling short of analyst predictions during the past fiscal year. The company will unveil its latest earnings Friday. Northwest Natural Gas is mainly engaged in the distribution of natural gas in Oregon and southwest Washington.

What analysts say:

• Buy, sell, or hold?: Analysts think investors should stand pat on Northwest Natural Gas with five of eight analysts rating it hold. Analysts like Northwest Natural Gas better than competitor Laclede Group overall. Zero out of three analysts rate Laclede Group a buy compared with three of eight for Northwest Natural Gas. Analysts still rate the stock a Hold, but they are a bit more wary about it compared with three months ago.
• Revenue Forecasts: On average, analysts predict $93 million in revenue this quarter. That would represent a rise of 101.1% from the year-ago quarter.
• Wall Street Earnings Expectations: The average analyst estimate is a loss of $0.33 per share. Estimates range from a loss of $0.34 to a loss of $0.31.

What our community says:
CAPS All-Stars are solidly backing the stock with 94.9% granting it an "outperform" rating. The community at large concurs with the All-Stars with 95.5% assigning it a rating of "outperform." Fools are keen on Northwest Natural Gas, though the message boards have been quiet lately with only 32 posts in the past 30 days. Northwest Natural Gas has a bullish CAPS rating of five out of five stars that is about on par with the Fool community assessment.

Management:
Over the last four quarters, revenue has fallen an average of 5% year over year. The company's gross margin shrank by 4.1 percentage points in the last quarter. Revenue fell 0.7% while cost of sales rose 4.9% to $124.3 million from a year earlier.

Now let's look at how efficient management is at running the business. Traditionally, margins represent the efficiency with which companies capture portions of sales dollars. The following table shows gross and net margins over the past four quarters.

Quarter	Q2	Q1	Q4	Q3
Gross Margin	22.9%	32.0%	31.0%	20.3%
Net Margin	1.4%	12.6%	11.0%	(7.8%)

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