NiSource (NYSE: NI) and Black Hills Corporation (NYSE:BKH) are both mid-cap utilities companies, but which is the better investment? We will compare the two businesses based on the strength of their earnings, institutional ownership, profitability, analyst recommendations, risk, valuation and dividends.
NiSource pays an annual dividend of $0.70 per share and has a dividend yield of 2.7%. Black Hills Corporation pays an annual dividend of $1.78 per share and has a dividend yield of 2.6%. NiSource pays out 81.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Black Hills Corporation pays out 74.8% of its earnings in the form of a dividend. NiSource has increased its dividend for 47 consecutive years. NiSource is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Valuation and Earnings
This table compares NiSource and Black Hills Corporation’s top-line revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|NiSource||$4.75 billion||1.81||$1.40 billion||$0.86||30.64|
|Black Hills Corporation||$1.70 billion||2.19||$588.78 million||$2.38||29.21|
NiSource has higher revenue and earnings than Black Hills Corporation. Black Hills Corporation is trading at a lower price-to-earnings ratio than NiSource, indicating that it is currently the more affordable of the two stocks.
Risk and Volatility
NiSource has a beta of 0.37, indicating that its stock price is 63% less volatile than the S&P 500. Comparatively, Black Hills Corporation has a beta of 0.82, indicating that its stock price is 18% less volatile than the S&P 500.
This is a summary of current ratings and recommmendations for NiSource and Black Hills Corporation, as reported by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Black Hills Corporation||0||0||5||0||3.00|
NiSource presently has a consensus target price of $25.86, suggesting a potential downside of 1.87%. Black Hills Corporation has a consensus target price of $73.40, suggesting a potential upside of 5.58%. Given Black Hills Corporation’s stronger consensus rating and higher probable upside, analysts plainly believe Black Hills Corporation is more favorable than NiSource.
This table compares NiSource and Black Hills Corporation’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Black Hills Corporation||7.71%||10.48%||2.84%|
Insider & Institutional Ownership
82.9% of NiSource shares are held by institutional investors. Comparatively, 94.7% of Black Hills Corporation shares are held by institutional investors. 0.3% of NiSource shares are held by insiders. Comparatively, 1.1% of Black Hills Corporation shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.
Black Hills Corporation beats NiSource on 11 of the 17 factors compared between the two stocks.
NiSource Inc. is an energy holding company. The Company is engaged in the distribution of natural gas. The Company operates through two business segments: Gas Distribution Operations and Electric Operations. The Company’s Gas Distribution Operations segment provides natural gas service and transportation for residential, commercial and industrial customers in Ohio, Pennsylvania, Virginia, Kentucky, Maryland, Indiana and Massachusetts. As of December 31, 2016, the Company’s Electric Operations segment provided electric services in 20 counties in the northern part of Indiana. The Company’s electric operations segment generated, transmitted and distributed electricity through the Company’s subsidiary NIPSCO to approximately 466,000 customers in 20 counties in the northern part of Indiana and engaged in wholesale and transmission transactions, as of December 31, 2016. NIPSCO owned and operated three coal-fired electric generating stations, as of December 31, 2016.
About Black Hills Corporation
Black Hills Corporation is a holding company. The Company is an integrated energy company, which is focused primarily on regulated utilities. The Company operates through segments, including Electric Utilities, Gas Utilities, Power Generation, Mining, Oil and Gas, and Corporate. As of December 31, 2016, the Electric Utilities segment generated, transmitted and distributed electricity to approximately 208,500 customers in South Dakota, Wyoming, Colorado and Montana. The Gas Utilities Segment includes the natural gas operations of Cheyenne Light. The Power Generation segment produces electric power from its generating plants and sells the electric capacity and energy principally to its utilities under long-term contracts. The Mining segment operates through its Wyodak Resources Development Corp. (WRDC) subsidiary. The Company’s Oil and Gas segment acquires, explores for, develops and produces natural gas and crude oil in the United States primarily in the Rocky Mountain region.
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