NorthWestern Heads Into Q3 With Montana Merger Ruling And Data-Center Deals Hanging In The Balance

NorthWestern Energy's third-quarter report lands at an unusual moment for a regulated utility: the numbers themselves may matter less than what management says about the Montana Public Service Commission. The company guided last quarter that a decision on its merger would arrive between mid-October and mid-November, which means the ruling could either be fresh news or still pending when results hit after the close on November 4. Either way, the call is likely to be dominated by that outcome and by whether a promising data-center pipeline is turning into signed contracts.

On the numbers, Wall Street is looking for earnings of $0.73 a share on revenue of $411.2 million. That would mean sales growth of about 6.3% but a 7.6% decline in per-share profit from the $0.79 earned a year ago. The gap between rising revenue and falling earnings is the quarter's most telling detail. Last quarter, new Montana rates drove a 38-cent year-over-year margin improvement, yet incremental Colstrip ownership costs subtracted 12 cents, including 5 cents of operating expense that went unrecovered because a tariff waiver fell short. If that drag persists, it helps explain why analysts expect a softer comparison, and any sign it is widening would be an unwelcome surprise.

Management's full-year guidance of $3.68 to $3.83 a share was reaffirmed rather than raised, and the consensus of $3.75 sits almost exactly at the midpoint. With adjusted earnings of $1.81 through the first half, the company needs roughly $1.94 in the back half to hit the Street's number. A third quarter near $0.73 would leave a manageable but meaningful Q4 load, so a reaffirmation would validate the steady narrative, while any narrowing toward the low end would suggest Colstrip costs or weather are biting harder than expected. A full Montana rate review on Colstrip recovery, plus the still-unresolved reconsideration of the 2024 rate case, remain the regulatory swing factors behind that math.

The growth story hinges on data centers. Last quarter the queue of customers in high-level assessment doubled to eight from four, and Quantica's interconnection request pointed to demand well beyond the 1.1-gigawatt first phase discussed earlier. But expectations were also trimmed: management now targets electric service agreements with only two of three developers, Quantica and Atlas, by year-end, after land delays pushed SABE out. This report is the last checkpoint before that deadline. Evidence that those two agreements are on track, or further growth in the assessment queue, would support the case for the combined company's 5% to 7% EPS growth target. Another slip would raise questions about how quickly this demand reaches the rate base.

Investors have leaned in. Shares have climbed 12% since the last report, beating the S&P 500 by 8 percentage points, and at $78.45 the stock is pressing right against its post-earnings high of $78.50, well above its 200-day moving average near $70. That puts it at a potential breakout point, but it also means a merger setback would hit a stock priced for approval. Sentiment has edged up to 16.7% bullish from 14.3%, a modest improvement rather than euphoria.

Ultimately, this quarter tests whether NorthWestern can deliver an in-line operating print while clearing its two biggest hurdles. A constructive Montana ruling, reaffirmed guidance and confirmation that the Quantica and Atlas agreements remain on schedule would keep the growth narrative intact. A contested merger outcome, new noise around the commission's composition, or another data-center delay would challenge the premium the stock has recently earned.

This earnings preview was originally published on Earnings Whispers.

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