The meter is running on gas company's solo roll.

• Author: Williams, C.C.
• Position: Company Profile - Statistical Data Included

A year ago, investors swarmed around Charlotte-based Piedmont Natural Gas Inc. with the enthusiasm moths show for naked light bulbs. In December 1998, shares flew as high as $36 in the afterglow of Fayetteville-based North Carolina Natural Gas Corp.'s announcement that it would be sold for 2.8 times book value.

The stock sank to $28.88 in February but jumped into the mid-$30s later that month after the state's other major gas utility, Gastonia-based Public Service Company of North Carolina Inc., agreed to be sold for three times book value.

But Piedmont, which adopted a shareholder-rights plan to foil hostile takeovers in February 1998, is run by executives who say they're comfortable going it alone. That has dimmed its attraction to investors. At $31.88 in early November, Piedmont was 12% off its 52-week high. As gas and electric utilities pair up to compete in a slowly deregulating industry -- 13 deals were announced in the first 10 months of 1999 -- some say Piedmont is fooling itself if it thinks it can remain independent.

Things are fine now. Piedmont has 673,000 natural-gas and propane customers in central Tennessee and the Carolinas, and it's adding about 30,000 customers a year, triple the natural-gas-industry average, says Ware Schiefer, the utility's president and chief operating officer.

If not for joint-venture start-up costs, that customer growth would translate to a sixth straight year of earnings growth in 1999, says Gregg Lucas of Wachovia Securities Inc. Earnings, with the added costs, should be around $1.88 in 1999 -- down from $1.96 in 1998. Earnings should reach $2.10 a share in 2000.

Piedmont has raised its dividend 21 straight years and 6% during the last four -- triple the industry average -- while maintaining a conservative pay-out rate of less than 70% of core earnings. Lucas expects it to pay $1.38 in 1999 and sees the stock reaching $37 in 12 months. "People get so focused on takeover that they miss that this is a company that has a large number of significant positive investments at work."

Though Piedmont hasn't made a major acquisition in 14 years, it's not oblivious to the merger mania. It made a play for Public Service and North Carolina Natural Gas but couldn't compete with the $900 million Columbia, S.C.-based SCANA Corp. paid for Public Service or the $354 million Raleigh-based Carolina Power & Light Co. paid for North Carolina Natural Gas. It still wants to buy a major gas distributor, but "a profitable...