Keep Your Eyes Peeled For Pullbacks In National Fuel Gas Stock

John Eade of Argus is waiting for a favorable entry point in the Hold-rated National Fuel Gas Co. NFG.

"We believe that NFG provides a unique long-term investment opportunity, as it combines the stability of a regulated gas utility with the growth potential of an E&P and midstream business," Eade wrote in a note.

However, losses in upstream E&P operations are offsetting steady performance in the company's gas utility, distribution and transmission businesses.

That said, the analyst expects the company's E&P and midstream businesses to recover over time and anticipates the utility business to post stable returns to fund the company's dividend, which yields about 3 percent.

The company is expected to report fourth quarter earnings in the next few weeks. The consensus is calling for EPS of $0.56, which would be a sharp improvement from last year's $0.41. Estimates have been rising over the past 90 days.

Shares have been weak relative to the market over the past quarter, declining 3.6 percent while the S&P 500 has advanced 15 percent. They have also underperformed over the past year, with a gain of 1.7 percent, while the broad market has advanced 7.3 percent.

"We will look for a non fundamental pullback in the stock price as an opportunity to move this well-managed company back on the BUY list at a discount price," Eade added.

At time of writing, shares of National Fuel Gas were up 0.42 percent to $52.59.